2020 1099-R Box 7 Code PJ - how to handle

[AndrewQQ]

Hi!  I received a distribution for excess contributions last year (t/y 2020) for a small amount.  I also received a 2020 1099-R with the gross distribution, taxable amount, and the small Fed and State Taxes withheld.  Box 7 has code PJ; so far, so good.

But code "J" says the amount is *taxable in 2019*.  Do I need to file an amended return for tax year 2019 against the return I filed last year (2020 for tax year 2019)?  The amount that was taxed is already being withheld by T/T in my t/y 2020 return as it was electronically downloaded completely for t/y 2020 return this past week.  I'm confused.

[DanaB27 · Accepted solution]

Yes, if you did not report the excess contribution plus earnings withdrawal on your 2019 return by creating a 1099-R then you will have to amend your 2019 tax return. Please see How do I amend a 2019 return in TurboTax?

When you enter the Form 1099-R 2020 with code P in your 2019 amended Tax return then TurboTax will include the distribution but ignore the taxes withheld. Only the earnings will be taxable.

1. Enter your 1099-R information and click "Continue"
2. On the "Which year on Form 1099-R" screen say that this is a 2020 1099-R.

The code P on the Form 1099-R 2020 will tell TurboTax to not include the distribution on the 2020 tax return. If taxes were withheld the TurboTax will carry the federal amount on line 25b on Form 1040 of your 2020 tax return and the state tax withheld will be carried to your state tax return. 

[AndrewQQ]

Thank you VERY much for a great answer. (Figured out my second question, no need to reply...thanks again!)

[pcpatter]

I know this thread is old but I am in the same situation and struggling to fix it.

In 2019 i made an overcontribution and excess was returned. Because they payment was made to me in 2020, i had no 1099R in 2019 to prove my reported numbers. Due to this the government accepted my penalty and income tax payment but rejected my withholding claim causing me to pay it after filing.

Since the payment was made to me in 2020, i received my 1099R with the year 2020 on it and code PJ in box 7. I tried submitting a 2019 amended including this proof of 1099R but it was rejected. So it sounds like i need to file a 2020 amended to report my excess withholding and trigger my refund?

[Critter-3]

The withholding on a 2020 form 1099-R are considered 2020 withholdings and go on a 2020 return ... only the income belonged to 2019 via the box 7 codes.