Excess Roth IRA Contribution

[ChippyTx]

I'm retired (no Earned Income). I incorrectly thought I could open and contribute to a Roth IRA.

I opened the Roth IRA (via ETrade) in Nov'2021 with $7,000 cash contribution from an existing personal Saving Acct (after-tax account). Then, in this Roth IRA Etrade account, I bought 4 ETF Investment funds.  ($6,810.03 Investments and the remaining $189.97 in cash). By the end of Dec'2021 it was worth $7,036.48

Very early in Jan'2022 (via TurboTax) I realized I was not allowed to Contribute because I had "No Earned Income". So, discovered (I think) that it was proper to Withdraw Excess Contribution. So, I did. I transferred all of the Investments and Cash to my personal (non-IRA) brokerage account from the Roth IRA account.

I did not report any of this Roth IRA Contribution and/or Withdrawal on my 2021 Tax filings.

Now, I've received a 2022 1099-R for my Roth IRA account with an amount $6,898.00 in Box 1, and Code P & J in Box 7.

Your help and suggestions would be appreciated. Thanks in advance.

[SharonD007]

You do need to report this 1099-R on your tax return to let the IRS know that you received a distribution of a Roth IRA in 2022. Please review the TurboTax Help article Where do I enter my 1099-R? for instructions.

Make sure you enter both codes P and J in box 7. Code P indicates that it was an excess contribution plus earnings/excess deferrals taxable in 2021 and code J indicates an early distribution from a Roth IRA.

[ChippyTx]

I'm still a bit confused. (and, sorry this is so wordy)

I entered my 2022 1099-R with Code "P & J" into my 2022 Tax Return.  

TurboTax says "It looks like you may need to Amend your 2021 Return" "Here's why: Your 1099-R reports earnings on a contribution you made in 2021. This information needs to go on your 2021 Return."

I went back to start to Amend my 2021 Return and discovered that I had reported the $7000 Contribution in my 2021 Return (despite what I said in my first Post).  2021 TurboTax also asked how much of the Contribution was Withdrawn before the filing due date (April 18, 2022).  I answered, $7,000....   100% of my erroneous Contribution was Withdrawn before the filing due date.

And, nothing more was said or referenced by TurboTax regarding my 2021 Contribution or the 100% Withdraw of that Contribution.

So, there doesn't seem to be anything to Amend on my 2021 Return.

But, now 2022 TurboTax is saying I have a 2022 1099-R that is reporting earnings on a Contribution I made in 2021.  I did make the Withdrawal in Jan-Feb'2022 to correct the Contribution error, and, it was before the 2021 Filing Due Date.   And, there wasn't any Earnings. In fact, 2022 1099-R reported a Withdrawal Distribution of $6,898, when the initial Contribution was $7,000.   It was actually a Loss.

So, I'm sure how to navigate this.

Could it perhaps be that the 2022 1099-R is Coded wrong? And, it shouldn't be reported as "Earnings"?

Or, perhaps, I simply enter this 2022 1099-R into my 2022 Return, as I currently have, and leave my 2021 Return alone (as I stated above)?

[SharonD007]

Since you reported your excess contribution and withdrawal on your 2021 tax return, there is no need to amend your 2021 tax return. The amount on your 2022 1099-R that you received with the Codes P & J that you entered in you 2022 tax return will not be taxed but if you had federal withholdings in box 4 or state withholdings in box 14, it will be included in the taxes that you already paid and will be deducted from your tax liability. 

To check that this income is not reported on your tax return, follow these instructions to preview in TurboTax Online:

1. Launch TurboTax
2. Select Pick up where you left off
3. Scroll down to Tax Tools and Select Tools
4. Select View Tax Summary
5. Select Preview my 1040 in the left menu
6. Lines 4a and 4b is where you would see any IRA distributions.  If you have only the 1099-R that you described above, there should not be any amounts in those boxes.

[ChippyTx]

Thank You !

Your response was crystal clear and makes perfect sense.