In Jan 2024 I contributed $8000 to my Roth IRA at Vanguard for year 2024. I discovered in February 2025 my MAGI was in excess of what's permitted. I have Vanguard remove the excess contribution plus earning on March 4, 2025 with no Federal and State tax withholding. Vanguard said I will get a 2025 Form 1099-R in 2026 with box 7 codes P, J. Some other Vanguard agent said box 7 if prior year code P, 1 and current year code 8,1. Which code is the correction one?
Two questions I want to know:
1) How do I report remove excess $8000 and earning 2024 tax return? Please show me how to input Turbo tax.
2) Can I report it now in my 2024 return and ignore the 1099-R when it comes Jane 2026. Do I have to amended tax return 2024?
Thank you.
Take a look at the list of codes and you will see the issue.
Your form could have 1 or 2 of the boxes filled. Since you are making your own form, code 8 is fine or 8P. You will need to keep the paper trail for your records. I want to urge you to create a financial notebook that is kept separate from your tax return. Keep it safe and each year, add your year-end statements from all your financial accounts plus a copy of your W2’s, your carryover information, and proof of your basis in your various investments. You must keep tax records from the time you purchase until sold/ loss used plus 3 years. It is very easy to lose track of disallowed losses, carryforwards, and basis. This can be a digital or paper notebook.
You're going to create a substitute 1099-R. Go to that section and enter it as if you had received it, checking the box for substitute 1099-R. Enter the total amount that was returned to you in box 1 and the total earnings that the account had in box 2a. Enter code 8 in box 7.
Then you can ignore the 1099-R when you receive it next year. No need to mess with it.
Why I cannot use code P, J in box 7.
You advise code 8 in box 7. What about code 1 in box 7.
Codes P and J would be best in box 7. indicate that the Form 1099-R is for 2025 when asked.
You advise code 8 in box 7. Just code 8 only? There is another drop down just ignore additional code 1 in box 7.
Take a look at the list of codes and you will see the issue.
Your form could have 1 or 2 of the boxes filled. Since you are making your own form, code 8 is fine or 8P. You will need to keep the paper trail for your records. I want to urge you to create a financial notebook that is kept separate from your tax return. Keep it safe and each year, add your year-end statements from all your financial accounts plus a copy of your W2’s, your carryover information, and proof of your basis in your various investments. You must keep tax records from the time you purchase until sold/ loss used plus 3 years. It is very easy to lose track of disallowed losses, carryforwards, and basis. This can be a digital or paper notebook.