I received a 2023 1099-R showing the 2022 tax year return of excess (Roth IRA) contribution (including earnings) done in early 2023 before I filed my 2022 income taxes. This 1099-R was entered on my 2023 Turbotax, and I don't see it was used as a factor in determining my 2023 taxes. When I entered it into Turbotax, I did get a one time popup indicating I might have to amend my 2022 tax return. When I try to do that by launching 2022 Turbotax and enter the 2023 1099-R info, with the code PJ, 2022 Turbotax lists it as "return of contribution taxable in 2021" (incorrect). There is another option for code 8 "return of contribution taxable in 2022" (correct, but that is not the code that appears on my 2023 1099-R). It would seem entering code 8 instead of PJ would be the way to go to have it compute the correct taxable amount for tax year 2022, but that doesn't match the 2023 1099-R I received that reflects this excess contribution being returned.
Please be aware, even though 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.
return of excess contribution:
before tax filing date including extension: positive earnings allocable to the excess are taxable on the Line 4b for the year of the contribution.
Code P is telling you that you have to amend your 2022 tax return.
That's what I thought, but entering code P has turbotax listing it as taxable in 2021. code 8 seems correct, but that's not what's on the 1099-R.
That's what I thought, but entering code P has turbotax listing it as taxable in 2021. code 8 seems correct, but that's not what's on the 1099-R.
I'd say TurboTax is not completely up to date yet.
if you want a workaround
use code 8
set the IRA/SEP/SIMPLE box to yes
enter distribution and taxable amount.
you will get the taxable amount added to Line 4b
Please be aware, even though 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.
Thank you so much, AnnetteB6,
This is EXACTLY and the most correct the answer I was looking for.
A TurboTax support rep suggested I not amend my 2022 return and that "perhaps I might get another 1099-R when I start distributions/withdrawals down the road". Community user Fanfare agreed with my original idea to use distribution code 8 instead of PJ, which would've ultimately computed the correct amended return FED/State Taxes owed, but that code wouldn't have matched what was sent to the FED and my state. Your answer AnnetteB6, was the absolute best/correct answer, along with the additional info on how to respond to the following TurboTax question of "Did you use your IRA to pay for any of these expenses?"