I'd found out I have excess contribution $7000 ROTH IRA for 2022,. I have a net loss and I did not asked the custodian to do the calculation, instead I did my own calculation and withdraw excess contribution in the amount of$3500 , then I contribute that excess toward 2023 Roth IRA.
I found out later I miscacluated the 2022 excess withdraw amount, I need to withdraw an additional $1000 but custodian now refuse for this year. So now I just found out I may have to pay the excess tax for the $3500 that I just contributed for 2023.
Can I asked the custodian to takeout the excess $3500 contribution for 2023 before april 18?
Also what does the filed substitution for 1099-R mean? does that mean it is an estimate 1099-R since I have not recieved one until next year?
thank you
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To confirm this is a regular Roth IRA? Why is the custodian refusing to withdraw an excess contribution for 2022? You have until the extended due date (October 16th, 2023) to withdraw the 2022 excess contribution plus earnings to avoid the 6% penalty on the 2022 excess contribution (Pub 590-A).
For the 2023 excess contribution you have until the extended due date of the 2023 tax return to remove it plus earnings to avoid the 6% penalty.
No, you don't use a substitute Form 1099-R, you just use a regular Form 1099-R. You will get a 2023 Form 1099-R in 2024 with codes P and J for the withdrawal of excess contributions for 2022 and earnings. But you should check with your custodian if you didn't fill out the correct form to request the withdrawal of excess contribution plus earnings. You might have a different code.
A 2022 Form 1099-R with codes P and J will have to be included on your 2022 tax return and you have two options:
To create a Form 1099-R in your 2022 return please follow the steps below:
Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2021" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2022.
Yes, for the explanation statement, you will enter that you withdrew the 2022 excess contribution of $7,000 with a loss of $2,285.
If you had a $2,285 loss on your $7,000 contribution then you are considered to have withdrawn the full excess contribution of $7,000. You will enter $7,000 as withdrawn by the due date on the penalty screen in the IRA contribution interview.
To create a Form 1099-R in your 2022 return please follow the steps below (for a loss):
To confirm this is a regular Roth IRA? Why is the custodian refusing to withdraw an excess contribution for 2022? You have until the extended due date (October 16th, 2023) to withdraw the 2022 excess contribution plus earnings to avoid the 6% penalty on the 2022 excess contribution (Pub 590-A).
For the 2023 excess contribution you have until the extended due date of the 2023 tax return to remove it plus earnings to avoid the 6% penalty.
No, you don't use a substitute Form 1099-R, you just use a regular Form 1099-R. You will get a 2023 Form 1099-R in 2024 with codes P and J for the withdrawal of excess contributions for 2022 and earnings. But you should check with your custodian if you didn't fill out the correct form to request the withdrawal of excess contribution plus earnings. You might have a different code.
A 2022 Form 1099-R with codes P and J will have to be included on your 2022 tax return and you have two options:
To create a Form 1099-R in your 2022 return please follow the steps below:
Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2021" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2022.
HI :
I appreciate taking the time to answer my questions. Yes, it is Roth IRA. I made wrong calculation on 1st withdrawal and requested Custodian for 2nd withdrawal of excess contribution for 2022 , they said only allow one time for 2022. The 2023 Roth contribution is carryover came from the 2022 excess contribution withdrawal, I read that it is 6% tax since it is not a withdrawal.
thank you.
You might want to check with someone else in the bank and ask for an explanation. You have until October 16th, 2023 to withdraw the 2022 excess contribution plus earnings. It shouldn't matter that you requested before to make the withdrawal of some of the 2022 excess contribution plus earnings as long as you have any contribution left for 2022 you should be able to withdraw it with the earnings.
The contribution for 2023 is a new contribution for 2023 since you withdrew money and then contributed it again for 2023 (this contribution will be entered on your 2023 tax return).
On the 2022 tax return, you will enter on the penalty screen the contribution amount (ignore earnings and losses here) that you removed by the extended due date (during the IRA contribution interview). You won't pay the 6% penalty on the contribution amount removed.
hi :
How to provide explanation for early withdrawal for 1099-R ?
I withdrew $4715 from Roth but had a loss.
$2285 was adjused loss from the $7000 excess contribution
$4715 withdrawal is the excess adjustment after the $2285 loss.
thank you
Yes, for the explanation statement, you will enter that you withdrew the 2022 excess contribution of $7,000 with a loss of $2,285.
If you had a $2,285 loss on your $7,000 contribution then you are considered to have withdrawn the full excess contribution of $7,000. You will enter $7,000 as withdrawn by the due date on the penalty screen in the IRA contribution interview.
To create a Form 1099-R in your 2022 return please follow the steps below (for a loss):
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