Can I file Form 5329 on its own?

[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.

Can I file Form 5329 on its own?

I know that if I file it on its own then it can't be e-filed and I will need to mail it with a check/money order. How can I check if the IRS has accepted my form?

Do you recommend that I just use TurboTax to e-file Form 1040 with the Form 5329 and a NYS return to make things easier?

[macuser_22]

No.   It must be part of the 2020 tax return since the 5329 penalty goes on the 1040 form Schedule 1.

*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.

[DanaB27 · Accepted solution]

No, you cannot file only Form 5329.

If you haven't filed your 2020 tax return then you can use TurboTax to file your tax return and create Form 1009-R for the withdraw of excess contribution and earnings.

To create a 1099-R in your 2020 return please follow the steps below:

1. Login to your TurboTax Account 
2. Click on the Search box on the top and type “1099-R”
3. Click on “Jump to 1099-R”
4. Select "I'll type it in myself"
5. Box 1 enter total distribution (contribution plus earning)
6. Box 2 enter the earnings
7. Box 7 enter P and J 
8. On the "Which year on Form 1099-R" screen say that this is a 2021 1099-R.

If you report it now in your 2020 return then ignore the 1099-R when it comes on your 2021 tax return unless there is Box 4 Federal Tax withholding and/or box 14 State withholding. Then you must 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 P will not do anything in 2021 tax return but the withholding will be applied to 2021.

If you have filed already your tax return then wait until you get the Form 1099-R  2021 in 2022 to amend your 2020 tax return.

[hchan32]

@macuser_22 

Thank you.

[hchan32]

@DanaB27 

Thank you.