Withdrew Excess 2019 Roth IRA Contribution + Earnings - What Year do Earnings Get Filed?

[karatechop79]

I had an excess Roth IRA contribution for 2019, that I just withdrew (plus earnings).  My IRA brokerage say that I should be receiving a 1099R for 2020.  Do I claim the earnings as taxable on my 2020 taxes, or do I have to go back and claim them on my 2019 return?  I'm confused because some of the earnings will presumably have been earned in 2019 and some in 2020.  I'm trying to wrap this up by Oct 15.  Thank you!

[macuser_22 · Accepted solution]

The earning (in the 1099-R box 2a) must be claimed in the tax year that the contribution was *for* not returned.   When you receive the 1099-R next January that should have a code PJ in box 7, you would need to amend 2019 to report it.

When you enter a 2020 1099-R with a code PJ into TurboTax 2019 it will ask what year is on the 1099-R, 2019 or 2020 - you choose 2020 and TurboTax will apply the earnings and a 10% penalty of you are under age 59 1/2. 

If you are over 59 1/2 then on the "Lets see if we can lower your tax bill" enter the box 2a amount in the "Another Reason" box to eliminate the 10% early withdrawal penalty on the earnings.

[karatechop79]

Thank you ... I'd like to clarify, so even though almost all of the earnings took place in CY2020, I will assign those earnings to my 2019 taxes, is that right?

Also, I was under the assumption that I needed to amend my 2019 taxes by Oct 15 2020 ... it sounds like that is not the case, and I will have to wait until Jan 2020 at the earliest to amend, is that correct?

[macuser_22]

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@karatechop79 wrote:

Thank you ... I'd like to clarify, so even though almost all of the earnings took place in CY2020, I will assign those earnings to my 2019 taxes, is that right?

Also, I was under the assumption that I needed to amend my 2019 taxes by Oct 15 2020 ... it sounds like that is not the case, and I will have to wait until Jan 2020 at the earliest to amend, is that correct?

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#1 - Yes.   The earnings are attributed to the tax year that the contribution was for (2019) nothing gets reported on your 2020 tax return.

#2 - You have 3 years to amend 2019 from the filing date.    The Oct 15 date is the latest that a 2019 contribution could be returned without a penalty assuming that you filed for an extension (or filed your 2019 tax return) before July 15.