Just a couple of questions you wrote that I should check the the IRA/SIMPLE/SEP box on my 1099-R form but when I click the ? next to that box TURBO TAX gives a reply that (this boxed is checked if your distribution is from a traditional IRA, SEP IRA, orSIMPLE IRA but not for ROTH IRAs ) So since one was a ROTH IRA should I still heck this box?  Also after I answer the 2022 1099-R question turbo asks  ( If I need to file a substitute 1099- R? ) Im not sure how to answer this since I haven't yet received my form

Thanks for all your help

---

@dmtbue wrote:

I have a similar situation.  My Roth IRA contribution for 2021 was limited to a fraction of the $7000 due to earnings.  I too discovered this while preparing my 2021 taxes using TurboTax.  Note:  I am over 59.5 years old.

I contacted my brokerage and had them remove the excess contribution plus the earnings so that I would not have to pay the 6% penalty.  My question is how to enter this into TurboTax.

 

If I create a 1099-R in advance for the removal of the excess contribution and enter this into turbo tax, do I enter in the net contribution ($7000 - excess contribution removed) into the ENTER Your ROTH IRA CONTRIBUTIONS 

and $0 for excess contributions?

 

Thanks in advance for your assistance!

---

*IF* you requested a return of contributions due to an excess contribution and the excess was removed before the extended due date of the 2021 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 2022 1099-R into the 2022 tax return since the withholding is reported in the year that the tax was withheld.

The 2022 code JP will not do anything in 2022 but the withholding will be applied to 2022.

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 2022 1099-R. - That makes it taxable in 2021 and not 2022

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 2022 1099-R on your 2021 tax return to avoid having to amend in 2022.

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.

Technically, a contribution made for 2022 between January 1 and April 18th, 2023 is deemed to have been made on the last day of 2022. Therefore, when you withdraw the excess contribution for 2022 plus earnings in 2023 before the extended due date you should receive a 2023 Form 1099-R with codes P and J. This would be reported on your 2022 tax return. But you might want to check with your custodian since some financial institutions issue a 2023 Form 1099-R with codes 8 and J when the contribution was made between January 1 and April 18th, 2023 for 2022. This would belong on your 2023 tax return.

Please be aware, "Beginning on December 29, 2022, the 10% additional tax on early distributions will not apply to a corrective IRA distribution, which consists of an excessive contribution (a contribution greater than the IRA contribution limit) and any earnings allocable to the excessive contribution, as long as the corrective distribution is made on or before the due date (including extensions) of the income tax return." (Instructions Form 5329)

In regards to the second row:

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 plus earning)
7. Box 2a enter the earnings
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.
12. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Another reason" if you are over 59 1/2 (if you are under 59 1/2 and removed the excess after December 29, 2022, then enter it next to "Corrective Distributions made on or after December 31, 2022")

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.

@shiyi11