How do I claim the Roth IRA deduction exception?

[Horsecamper]

Last year the IRS told me I overpaid my Roth IRA contributions because I didn't have enough AGincome, so with the help of my brokerage firm, they transferred the excess out of my Roth into my regular investment account. Now the 1099-R from them is showing a distribution that, even though it says on line 2a is non-taxable, is coming up as income on my Turbotax return at the very end. I'm also not getting any deduction for the additional $4000 I contributed this year, so it seems like a double whammy. I've tried everything I can think of, but nothing is working. I thought maybe I would qualify under one of the exceptions, but can't find where to do that. I sure could use some help figuring this out!

[RobertB4444]

Line 2a on your 1099-R for the amount that you received back from the overcontribution should be zero.  But since it is a 2021 contribution and you removed it to correct your 2021 return you can also just leave it off of your 2022 return.

You should not receive any credit for your ROTH contribution for this year.  There is no tax deduction for making a contribution to a ROTH because it is tax advantaged when you withdraw it, not when you contribute it.

@Horsecamper 

[Horsecamper]

Thank you! That all makes perfect sense. So if I understand you correctly, I should just delete the 1099-R from my broker even though they've certainly submitted to the IRS? If that's the case, I'm surprised that the Turbotax program doesn't take line 2a instead of line 1, if 2a is zero. I'm worried that since they reported it as a distribution, it's showing up as additional income, and is taxable. You're saying that's not the case, it's not taxable because it's a Roth. But Turbotax is sure making it look like it is taxable at the end of my return. Final confirmation, the solution is to just delete that 1099-R for 2022, correct?

[dmertz]

What is the code in box 7 of this Form 1099-R?

[Horsecamper]

J and P

[dmertz]

If box 2a of this 2022 Form 1099-R is zero, TurboTax is not applying any early-distribution penalty or including it in taxable income.  As long as there is no tax withholding shown on the form, you can enter the Form 1099-R or leave it out, it makes no difference on your 2022 tax return.  If this Form 1099-R does show tax withholding, it must be entered into 2022 TurboTax.

[Horsecamper]

Thank you! I think I understand it all now. Appreciate the help!