2021 excess Roth Ira contribution

[ir63]

I made extra contribution of $3250 to my Roth Ira in 2021. I am trying to apply extra contribution to 2022.

I contacted my broker and got my 2022-ROTH-IRA 1099-R form.  The box 1 of the form (Gross distribution) is $2592 and all other boxes are blank, the code in box 7 is "PJ". I am trying to amend my 2021 tax return and don't see any penalty. I was under impression that it should be 6% penalty. Did I miss anything?

[DanaB27]

No, since you removed the excess plus earnings before the due date of the 2021 tax return you do not have to pay the 6% penalty. It seems you didn't have any earnings and instead had a loss since box 2a is blank and you have returned less than the excess contribution. Therefore, this won't be taxable on your 2021 tax return since only the earnings are taxable and subject to the 10% early withdrawal penalty.

Please make sure that you do not enter that you have an excess contribution from prior years on your 2022 tax return (if there is an entry delete it):

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. On the "Do you have any Excess Roth Contributions" answer "Yes"
5. On the "Enter Excess Contributions" screen delete anything that was carried over.

[IM63]

1.I contacted my broker AFTER due date 2021 and I got the form 1099-R 2022. I already entered this form to my 2022 tax return

2. How to get to “Jump to IRA contributions"? I followed instruction in step 1. Click on "Search" on the top right and type “IRA contributions”, but all I can see is the topics for discussions. I am using Turbo tax Premier installed on my desktop computer

[DanaB27]

1. Did you remove it before October 17, 2022? If yes, then you removed it in time and don't have to pay the 6% penalty on your 2021 tax return.

The 2022 Form 1099-R with codes P and J won't make any changes to your 2022 tax return except apply withheld taxes. It belongs on your 2021 tax return but since you had a loss there isn't a taxable event. Therefore, you don't need to amend your 2021 tax return. 

2. Please try these instructions:

1. Click “Deductions &Credits” on the top
2. Click "I'll choose what to work on"
3. Scroll down to “Traditional and Roth IRA Contributions” and click “Start”
4. Select “Roth IRA”
5. On the "Do you have any Excess Roth Contributions" answer "Yes"
6. On the "Enter Excess Contributions" screen delete anything that was carried over.

@IM63 

[ir63]

I just amended my 2021. What should I do next? I don't see the option to E-file my amended tax Return. Should I mail it? If so, what needs to be mailed: all forms or only amended?

[DanaB27]

Yes, if you don't get the option to e-file your 2021 amended return then you will mail it. You will need to send Form 1040-X and any forms that changed.

Please see Can I e-file my federal Form 1040-X amended return? for additional information.