1099-R excess Roth contributions Inaccurate penalt...
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New Member

1099-R excess Roth contributions Inaccurate penalty?

My spouse and I had excess Roth IRA contributions in 2019.   This was ID's when completing Year 2019 taxes in 2020.  Before the July 15, 2020 tax filing deadline for Year 2019 we withdrew the excess contributions and interest.  Just recently we received 1099-Rs for the distributions (Form Year 2020).  I entered the1099-Rs for my 2020 taxes (which noted PJ in Box 7) and upon doing so noticed the refund amount decline.  I have not submitted the 2020 tax return  yet but previewing the forms it shows a Form 5329 generated with notations for Additional Tax (6% penalty) for Line 25 amounts for both my spouse and I.   Since the excess contributions were removed before the tax filing deadline for 2019 isn't this penalty assessment inaccurate?  Trying to ID what I may have entered wrong. 

 

I appreciate the help!

3 Replies
Level 15

1099-R excess Roth contributions Inaccurate penalty?


@polkadots wrote:

My spouse and I had excess Roth IRA contributions in 2019.   This was ID's when completing Year 2019 taxes in 2020.  Before the July 15, 2020 tax filing deadline for Year 2019 we withdrew the excess contributions and interest.  Just recently we received 1099-Rs for the distributions (Form Year 2020).  I entered the1099-Rs for my 2020 taxes (which noted PJ in Box 7) and upon doing so noticed the refund amount decline.  I have not submitted the 2020 tax return  yet but previewing the forms it shows a Form 5329 generated with notations for Additional Tax (6% penalty) for Line 25 amounts for both my spouse and I.   Since the excess contributions were removed before the tax filing deadline for 2019 isn't this penalty assessment inaccurate?  Trying to ID what I may have entered wrong. 

 

I appreciate the help!


Entering a code PJ into 2020 TurboTax should have told you that you need to amend 2019.

 

Code P on a 2020 1099-R means taxable in *2019*.

 

You need to amend 2019 and enter the 1099-R in it.   Only the box 2a earnings are taxable in the year that the contribution was *for*, not returned.

 

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
New Member

1099-R excess Roth contributions Inaccurate penalty?

Thanks for the quick reply @macuser_22 -- TurboTax did prompt me to amend 2019 which I have prepared but not yet submitted.

 

TurboTax did not indicate that I should remove the 1099Rs from 2020 return but is that what I should do?  The excess was distributed in 2020 but before the 2019 tax deadline.

Level 15

1099-R excess Roth contributions Inaccurate penalty?

It should not do anything in 2020.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
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