1099-R no payer's state number

[hchan32]

So I made erroneous Roth IRA contributions in 2020 when I had no earned income, but withdrew all my contributions and earnings in February before the filing due date (April 15, 2021). I won't be receiving my 1099R from Vanguard until next year in 2022, but I need to file this year since I owe the 10% penalty tax on my earnings. The 10% early withdrawal penalty on my earnings is the only tax I owe.

I complicated things by requesting federal and state withholding when I removed my contributions and excess. Now TurboTax is asking me for the Box 15 Payer's State Number but I don't have the information since I won't be getting the 1099-R until next year. I want to e-file my return but I can't e-file without the Payer's State Number. I've seen this thread suggesting that I input the payer's federal EIN in replacement.

What is my best course of action?

[macuser_22]

If you has state tax withheld then the payers state ID must be supplied in order for the state to apply the withholding to your account.    HOWEVER, since the excess was returned in 2021 then any tax withheld can ONLY be reported on your *2021* tax return *next* year.      That withholding applies to the year withheld, not the year of the excess which is why have tax withheld on a prior years excess is useless.

*IF* you requested a return of contributions due to an excess contribution and the excess was removed before the extended due date of the 2020 tax return and the earnings were also returned and you know that the IRA custodian will report this as a return of contribution and not as a normal Roth distribution but as a return of contribution with a code "JP" in box 7 - then:

You can just report it now and ignore the 1099-R when it comes unless there is Box 4 Federal Tax withholding and/or box 14 State withholding. Then you must also enter the 2021 1099-R into the 2021 tax return since the withholding is reported in the year that the tax was withheld.

The 2021 code JP will not do anything in 2021 but the withholding will be applied to 2021.

You would enter the 1099-R with the total distribution in box 1 (the contribution plus the earnings),

The earnings in box 2a,

Enter code "P" in box 7 (Top) - don t worry that it will say "taxable in 2019 "

Enter code "J" in box 7 (Bottom).

On the "Which year" screen say that this is a 2021 1099-R. - That makes it taxable in 2020 and not 2019

After the 1099-R summary screen press continue.

If you are over 59 1/2 then on the "Lets see if we can lower your tax bill" enter the box 2a amount in the "Another Reason" box to eliminate the 10% early withdrawal penalty on the earnings.

Enter the explanation for the excess contribution and that you are reporting a 2021 1099-R on your 2019 tax return to avoid having to amend in 2021.

The box 2a earnings will be taxable income reported on line 4b on the 1040 form and if under age 59 1/2 will also be subject to a 10% penalty on a 5329 form that will be reported on line 59 on the 1040 Schedule 4 form.

[hchan32]

@macuser_22 

I am aware that the federal and taxes withheld apply to 2021 and not 2020. So when I input a 2021 1099-R into TurboTax, do I leave the federal and state withholding boxes blank even though I know that Vanguard will send a 2021 1099-R with the withholding boxes filled?

Will it not matter what I input for the withholding boxes on my 2020 return since the withholdings only apply to 2021?

[macuser_22]

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@hchan32 wrote:

@macuser_22 

I am aware that the federal and taxes withheld apply to 2021 and not 2020. So when I input a 2021 1099-R into TurboTax, do I leave the federal and state withholding boxes blank even though I know that Vanguard will send a 2021 1099-R with the withholding boxes filled?

Will it not matter what I input for the withholding boxes on my 2020 return since the withholdings only apply to 2021?

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A 2021 1099-R entered into the 2020 program will ignore any tax withholding.   Only the box 1, 2a and box 7 are used for 2020.   The 2021 software will only enter the tax withholding and ignore all else for a 1099-R with a code P in box 7.    If you want to enter it now to avoid having to amend then leave the tax withholding boxes blank.