Excess Deferral 1099-R, Box 7 Code P. How to indicate this is a 2024 Form 1099-R

[c0micrage]

Hi,

I am preparing my 2023 tax return and need to report Excess Salary Deferral in Turbo Tax. I am following the following turbo tax steps

1. Report the excess deferral on your 2023 return in the Income section for Retirement Plans and Social Security whether or not you received a Form 1099-R before you file your return. Enter as much information as you can. Report the excess deferral amount in boxes 1 and 2a, and use code P in box 7. Indicate that this is a 2024 Form 1099-R.

In my Turbo Tax, I went to the 1099-R page, added the amount on boxes 1 and 2a. However in box 7, The dropdown for P code is "P-Return of Contribution taxable in 2022" and I selected it according to the instruction. How can I indicate that this is for 2024 form 1099-R? 

Thanks in advance for any help

[DanaB27]

Yes, you will select code P.  Code P will say in the drop-down menu "Return of contribution taxable in 2022" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2023. Make sure you select it is a 2024 Form 1099-R in the follow-up question. The excess deferral will show up on line 1h of Form 1040.

Please be aware, if you do not take out the excess amount by April 15th, then you are taxed twice on the excess deferral left in the plan.  This happens once when you contribute it and again when you receive it as a distribution. You can't include the excess amount in the cost of the contract even though you included it in your income.

If you receive the distribution of the excess deferral and earnings by April 15th then please note for the Tax Year 2024 tax filing due April 15, 2025: 

Two 2024 Forms 1099-R will be issued reporting the excess.

• Form 1099-R with Code P in box 7 can be ignored if you already reported the excess as in 2023. 
• However, the earnings on Form 1099-R with Code 8 in box 7 should be reported in 2024.

[dmertz]

When you select code P in the box 7 selection list, 2023 TurboTax will ask if the form is a 2023 form or a 2024 form.  Answer that it is a 2024 form.

[c0micrage]

I will call my company broker to make the withdrawal for the excess contribution.

I will request the payer name, company, and ID, correct? to fill out the 1099-R.

I checked 2024 for the 1099-R and noticed I had to pay additional tax, correct?

So for next year, when I prepare my 2024, will I have pay more tax when I get the 1099-R and select box 7, option 8?

Thanks for you help

[DanaB27]

Yes, you can contact the custodian to get the information and to request the withdrawal of the excess deferral and earnings.

Yes, the excess deferral is added to your taxable income and therefore your taxes will increase.

Yes, if you had earnings on the excess deferral then you will get a 2024 Form 1099-R with code 8 and you will have to report it on your 2024 tax return. These earnings will increase your taxable income.

[ml93]

Hi @DanaB27, I'm looking for some clarification if you could help again!

I'm a bit confused about the wording used here:

"Form 1099-R with Code P in box 7 can be ignored if you already reported the excess as in 2023."

Does "ignored" mean to not input the form in my 2024 tax return? Or should I input the form anyways for transparency, knowing that I don't need to go back to amend my 2023 return? TurboTax gives me a warning about needing to amend the 2023 return when I put the 1099-R in, though I know I don't need to since I reported it as instructed in my 2023 tax return.

Thanks!

[DanaB27]

You don't need to enter it on your 2024 return since it belongs on the 2023 return. But you do not need to amend your 2023 return since you already reported it on your 2023 return. Therefore, you can ignore it.

@ml93