2022 Roth IRA Excess Contribution Withdrawal & from 5498

[prk1900]

Hi, 

In 2022 I made Roth Contribution, when I was working on my taxes thru Turbotax I realized in Feb 2023 that this excess.  I immediately withdrew excess contribution prior to Tax deadline and I did not have any gain for the period.  I read few articles and community forums on how to enter 1099-R for 2022 Roth excess withdrawal and it worked fine.  Do I still enter "5498" I received for Roth IRA 2022 contribution I had made prior to withdrawal?  As soon as I enter that, it is penalizing me 6% on my tax return.   

[DanaB27 · Accepted solution]

No, if you withdrew the full contribution then you don't need to enter it in the IRA contribution interview. Another option is to enter it in the contribution interview and enter the contribution amount removed (ignore losses) on the penalty screen:

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. Continue until the penalty screen and enter the excess contribution amount withdrawn.

You will get a 2023 Form 1099-R  in 2024 with codes P and J for the withdrawal of excess contributions and earnings. This 1099-R will have to be included on your 2022 tax return and you have two options:  

• You can wait until you receive the 2023 Form 1099-R in 2024 and amend your 2022 return or
• You can report it now in your 2022 return 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 enter the 2023 Form 1099-R into the 2023 tax return since the withholdings are reported in the year that the tax was withheld. The 2023 code P will not do anything to the 2023 tax return but the withholdings will be applied to 2023.

To create a Form 1099-R in your 2022 return please follow the steps below:

1. Login to your TurboTax Account 
2. Click on the "Search" on the top right and type “1099-R” 
3. Click on “Jump to 1099-R”
4. Answer "Yes" to "Did you get a 1099-R in 2022?"
5. Select "I'll type it in myself"
6. Box 1 enter total distribution (contribution minus loss)
7. Box 2a enter $0
8. Box 7 enter J and P
9. Click "Continue"
10. On the "Which year on Form 1099-R" screen say that this is a 2023 Form 1099-R.
11. Click "Continue" after all 1099-R are entered and answer all the questions.

Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2021" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2022.

Only earnings are taxable in 2022 and therefore you won't have any taxable income to report but TurboTax will add an explanation statement when you enter the 2023 Form 1099-R with codes P and J.