topic Re: 1099-R multiple codes in Get your taxes done using TurboTax

1099-R multiple codes

mjc19 — Wed, 19 Feb 2025 19:05:23 GMT

Hi, I made a $7000 traditional IRA contribution in November 2024. I realized I exceeded the limit based on my MAGI, so I did a withdrawal of excess in February 2025 totaling $7,339.73 (original amount plus earnings). I had taxes withheld. I asked the bank for the breakdown so I could enter my own 1099-R since the bank won't publish theirs until 2026 and I don't want to have to amend my 2024 return later.

Here is the breakdown:

Code 1 Premature
Gross $145.09
Fed Tax 14.51
ST Tax 129.13

Code 8 Excess
Gross $194.64
Fed Tax 19.46
ST tax 173.23

Code P Excess
Gross $7000
Fed Tax 0
ST tax 0

I can't figure out which items go on my 2024 return and which go on the 2025, and in which boxes of the 1099-R I'll be creating. Do you have any insight?

Re: 1099-R multiple codes

ThomasM125 — Wed, 19 Feb 2025 19:22:02 GMT

You put the distribution amount in box 1 on 1099-R form. The earnings go in box 2a. You put code 8 in box 7.

Re: 1099-R multiple codes

mjc19 — Wed, 19 Feb 2025 21:13:47 GMT

Thanks. Do I do anything with the Code 1 numbers?

Re: 1099-R multiple codes

DanaB27 — Fri, 21 Feb 2025 19:54:52 GMT

To clarify, you stated that you made the excess contribution in 2024 and withdrew the excess in 2025 with earnings. If that is case, then you should only get a 2025 Form 1099-R in 2026 with codes P but your financial institution is saying they will issue 3 Forms with different codes? Also, there is no MAGI limit for making traditional IRA contributions. The MAGI only affects the deductibility.

The 2025 Form 1099-R with codes P will have to be included on your 2024 tax return and you have two options:

You can wait until you receive the 2025 Form 1099-R in 2026 and amend your 2024 return or
You can report it now in your 2024 return and ignore the 1099-R when it comes unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding. Then you must enter the 2025 Form 1099-R into the 2025 tax return since the withholding is reported in the year that the tax was withheld. The 2025 code P will not do anything to change the income in the 2025 tax return income but the withholding will be applied to 2025.

To create a Form 1099-R in your 2024 return please follow the steps below:

Login to your TurboTax Account
Click on the "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”
Answer "Yes" to "Did you get a 1099-R in 2024?"
Select "I'll type it in myself"
Box 1 enter total distribution (contribution plus earning) of $7,339.73
Box 2 enter the earnings of $339.73
Box 7 enter P
Check the "IRA/ SEP/ SIMPLE" box
Click "Continue"
On the "Which year on Form 1099-R" screen say that this is a 2025 1099-R.
Click "Continue" after all 1099-R are entered and answer all the questions.
Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return".

Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2023" you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2024.

[Edited 2/21/2025 | 11:50 am PST]

@mjc19

Re: 1099-R multiple codes

mjc19 — Fri, 21 Feb 2025 14:39:50 GMT

Hi Dana B27,

Yes, I made the contribution in November 2024 and withdrew the excess with earnings in February 2025. Charles Schwab financial institution told me there would be three codes: 1, P, and 8. When I spoke with a representative, he said Code 1 was because I had opted to withhold taxes.

I don't know how many 1099-R's they will issue in 2026, but it sounds like there will be 3 codes.

Going with the second option you presented, should I include the gross amounts in my 2024 return now and then do the tax withholding portions in the 2025 return? For example, in 2024, I could say X amount in Box 1 and X in Box 2A (indicating codes 1 and 8 are taxable), then in 2025, say X amount in Box 1 and 0 in Box 2A (meaning I already paid taxes). I think the software would allow that.

Unless you see a problem with it, I would do three 1099-R entries, one for 1, one for 8, and one for P, when filing my return in order to mimic what the bank told me and keep it clear on the software. I think that would be best, but am open to learning differently.

Re: 1099-R multiple codes

fanfare — Fri, 21 Feb 2025 14:54:40 GMT

Howver you make it happen, include 339.73 on Line 4b of your Form 1040 (along with any other amounts that go there).

That's the only thing you have to do on your 2024 tax return.

You can make up a 1099-R since you don't have it yet.

@mjc19

Re: 1099-R multiple codes

mjc19 — Fri, 21 Feb 2025 15:11:16 GMT

Perfect, thank you everyone!

Re: 1099-R multiple codes

dmertz — Fri, 21 Feb 2025 16:24:27 GMT

Based on the description of the transactions and the Forms 1099-R, what the bank did to process this return of contribution makes no sense. (Bank personnel are notorious for being rather clueless about how to process transactions involving IRAs.)

What they should have done is process a single return-of-contribution transaction that would be reportable on a single Form 1099-R with $7,339.73 in box 1, $339.73 in box 2a, code P in box 7 and the IRA/SEP/SIMPLE box marked.

The only reason that there would be $145.09 reported with code 1 is if there had been only $194.64 of gain attributable to the $7,000 being returned, meaning that the $145.09 was not part of the return of contribution. Even then the $195.64 should be present on the code-P Form 1099-R. Based on the description of events, under no circumstances should anything be reported with code 8. (Code 8 might make sense if this was a return of contribution from an employer plan like a 401(k), but nothing suggests that this is anything but a return of contribution from a traditional IRA.)

Note that there is no MAGI limit for being eligible to contribute to a traditional IRA. MAGI only has the potential to affect the deductibility of a traditional IRA contribution. Still, you were permitted to obtain a return of the contribution even though it was not an excess contribution.