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!
@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.
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.
Hello, I am in a similar situation for the current tax year. I am aware that the interest I just removed from my Roth IRA is taxable in tax year 2020, but the 1099-R will not be generated until 2021. Can I report this amount on my 2020 return before receiving the 1099-R or must I wait until next year and file an ammended return?
@scuba_climber wrote:
Hello, I am in a similar situation for the current tax year. I am aware that the interest I just removed from my Roth IRA is taxable in tax year 2020, but the 1099-R will not be generated until 2021. Can I report this amount on my 2020 return before receiving the 1099-R or must I wait until next year and file an ammended return?
Yes, but in your case the box 7 codes would be 8 and J since it was a 2020 contribution returned in 2020. The total returned in box1, the earnings in box 2a. If reported now, you can ignore the real 1099-R when it comes.