recharacterization of 2019 contribution with 1099-R in 2020 when contribution was removed in 2020 before filing 2019 taxes. What do I do with this 1099-R?

[TAXPERPLEXED]

In 2019, I made an IRA contribution.  I made too much that year and had to remove it (return of 2019 tax year excess contribution).  I removed it in 2020, before filing my 2019 taxes.  This year, 2021, I received a 1099-R for the excess contribution (no gain) with codes J and P listed. 

My question: I've seen 2 conflicting discussions.  1. One says to amend 2019 taxes and then not report this 1099-R that I received in 2021, which I did; no change to my taxes owed. 

2. The other says to create a substitute 1099-R in my 2020 tax return. What does that do?  It looks like you only use this if you can't get the 1099-R from your plan administrator.  

It seems like this should be fairly simple as I took the 2019 contribution out before filing 2019 taxes.  So why am I getting this 1099-R  which is listed for 2020.  Right now, in TurboTax, I'm paying taxes on it.  

Help!!!!

[ThomasM125]

You received the 1099-R form in 2020 because that is when the distribution was made for the repayment of your excess contribution made in 2019. Since the contribution was made in 2019, you have to amend your 2019 tax return.

You need to amend your 2019 tax return and enter the distribution on that tax return. To report the earnings on the excess contribution, you should enter the 1099-R on your amended return.

Enter in box 1 the distribution amount. In box 2 enter the earnings. Enter code "P" and "J" in box 7. Work through the questions in TurboTax after you entered the 1099-R until you see a question regarding why you made the distribution, to which you will respond it was a return of an excess contribution.

[Edited 3/11/21 12:06 PM EST]

@TAXPERPLEXED

[macuser_22 · Accepted solution]

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@TAXPERPLEXED wrote:

In 2019, I made an IRA contribution.  I made too much that year and had to remove it (return of 2019 tax year excess contribution).  I removed it in 2020, before filing my 2019 taxes.  This year, 2021, I received a 1099-R for the excess contribution (no gain) with codes J and P listed. 

My question: I've seen 2 conflicting discussions.  1. One says to amend 2019 taxes and then not report this 1099-R that I received in 2021, which I did; no change to my taxes owed. 

2. The other says to create a substitute 1099-R in my 2020 tax return. What does that do?  It looks like you only use this if you can't get the 1099-R from your plan administrator.  

It seems like this should be fairly simple as I took the 2019 contribution out before filing 2019 taxes.  So why am I getting this 1099-R  which is listed for 2020.  Right now, in TurboTax, I'm paying taxes on it.  

Help!!!!

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A 1099-R code PJ must be entered in an amended 2019 tax return .   The 1099-R box 1 amount is the returned contribution plus earnings (if any). The earnings will be in box 2a (or zero of no earnings or a loss).

Only the box 2a amount is taxable.

Nothing gets entered into 2020.

You do NOT enter a substitute 1099-R (Substitute is ONLY to correct a 1099-R error that the issuer  refused to correct)   Your 1099-R is correct.

[TAXPERPLEXED]

Thank you so much for the help!  

Should I see a Form 1040-X in my amended 2019 TurboTax files? 

Also, do I need to send in an amended state return? 

[AmyC]

You have to create the amended return. You will need to file a state amend as well.

Once your return is accepted and the finances are settled, you can file an amended return. 

• Save a copy of the original return before doing an amended return. See: 
  • how to file an amended return.
  • I need to amend my state return.
  • Can I e-file my amended state return?
  • Can I e-file my 1040X to amend my return?
• Pay additional tax. Taxpayers who will owe more tax should file Form 1040-X and pay the tax as soon as possible to avoid penalties and interest. They should consider using IRS Direct Pay to pay any tax directly from a checking or savings account for free.
• Track amended return status online. Taxpayers can track the status of their amended tax return in English and Spanish using Where’s My Amended Return?  Amended returns take up to 16 weeks to process and up to three weeks from the date of mailing to show up in the system.