How to amend prior year tax return for tax on return of excess of Roth IRA 1099-R

[Eralimited57]

In 2019 I put money into a Roth account.  I am over 59 1/2 and so I put in the allowable limit of $7,000.  Then a few months later that same year (2019) I transferred money from my IRA to my Roth account.

While the $7,000 was in my account it earned a taxable amount of $210.71 (stocks).

I found out that we had gone over the limit of $203,000 MAGI and as a result I had to do a "return of excess" and have the full $7,210.71 taken out of my Roth IRA and returned to me.  This was done that same year a few months later in 2019.

I now have a tax year 2020 1099-R that shows BOX 1 Gross Distribution $7210.71, Box 2 Taxable amount $210.71 and BOX 7 Codes P and J.

Upon entering all this into my 2020 turbo tax it says that I may have to file an amended 2019 return?

Do I need to file an amended 2019 return or no?

TIA

Thank you

[DanaB27]

Yes, you will have to amend your 2019 tax return if you haven't already reported the return of the excess contribution on your 2019 tax return (created a substitute 1099-R on the 2019 tax return).

Please see How do I amend a 2019 return in TurboTax? to add the 1099-R on your 2019 tax return.

[Eralimited57]

Dana,

I found this from one of the existing Expert tax posters:

https://ttlc.intuit.com/community/taxes/discussion/overcontributed-to-roth-ira-in-2018-do-i-add-my-1...

Let me know what you think and if you have any questions about my situation.

Thank you

Lee

[DanaB27]

Lee,

The withdrawn excess contribution ($7,000) won't be included in the gross income but the earnings ($210.71) on this excess contribution have to be included in your income on your tax return.

The IRS states

How to treat withdrawn interest or other income.

 

You must include in your gross income the interest or other income that was earned on the excess contribution. Report it on your return for the year in which the excess contribution was made. 

[Eralimited57]

Dana,

For my situation, what exactly will I have to do in the 2019 tax amendment in Turbotax to report the $210.71?

Can you be very specific about what needs to be changed/filled out on the amended 2019 form?

Lee

[DanaB27]

After opening your amended return please follow these steps to enter your 1099-R on your 2019 amended return:

1. Click on the Search box on the top and type “1099-R”
2. Click on “Jump to 1099-R”
3. Select "I'll type it in myself"
4. Enter you 1099-R as shown
5. On the "Which year on Form 1099-R" screen say that this is a 2020 1099-R.
6. Continue through the questions.

For the reason for the amendment answer you are reporting the withdraw of excess IRA contributions and earnings from a 1099-R.

[Eralimited57]

Dana,

Do I also enter the exact same information from my 2020 1099-R info on my 2020 tax year taxes in addition to putting it on my 2019 amended form as you have outlined so nicely?

So in other words do I enter my 2020 1099-R info on both my current 2020 taxes as well as my amended 2019 taxes?

And when I amend my 2019 taxes will it tell me how much I will owe and do I just send in the forms and payment for the tax due on the 210.71?

Lee

[DanaB27]

No, you do not need enter the 2020 1099-R on your 2020 unless you had federal taxes withheld in box 4 or state taxes in box 14. If you already entered the 2020 1099-R on your 2020 tax return then you do not need to delete since TurboTax will know to ignore it for 2020 because of the codes in box 7. 

Yes, once you finished the 2019 amendment it will show how much you owe. When you first start it will go to $0 and then when you enter the information it will show you how much you owe.

Yes, you will mail the Form 1040X, the new Form 1040, the 1099-R and payment on the tax due. Please see Where to File Addresses for Taxpayers Filing Form 1040X.

You can also pay the amount due online: IRS Paying Your Taxes

[Eralimited57]

Dana,

If I decide to include the 1099-R entries on my 2020 taxes (recall I did a 1040-X (2019 tax year) to show my 1099-R ($7,210.71), would I also need to include a copy of my 1099-R (dated 2020) with my 2020 filing since it is in my 1040-X package?  I hope that makes sense.  🙂

Lee

[DanaB27]

If you want to also include the 1099-R on your 2020 return and decide to mail your tax return instead of e-filing then you will only need to include a copy if taxes were withheld on the Form 1099-R (box 4 and box 14).

[Eralimited57]

Dana,

I have another question about my 1099-R situation.  Please review the previous messages in case you need to refresh your memory in regards to my particular situation.

Since I amended my 2019 tax year taxes using a 1040-X and showed that I owed taxes on the gains, namely $210.71 (shows as $211) when I do my 2020 tax year taxes do I need to enter the amounts from my 1099-R for box 1 ($7,000) and box 2 ($210.71) ?  I recall you said that I do not have to include the 1099-R with my 2020 tax year taxes.  If I am paying tax on the gains for the amended 2019 tax year it does not seem like I would have to include the $210.71 and pay taxes on it a second time.  Not sure how this works and what I need to include on my 2020 tax year taxes in regards to the 1099-R and the Box 1 and 2 and Box 7 (Distribution Codes) PJ in this case.    Thanks so much for you continue help with this.   Lee

[Irene2805]

No - You do not have to include the 1099-R in your 2020 return.  In box 7, it had code P, indicating that it was taxable in 2019.  You've already amended your 2019 return, so you don't have to do anything else.

[Eralimited57]

Hello Irene,

So even though I have a 1099-R with tax year 2020 on it, I do not have to report the box 1 number or box 2 number or the code PJ as a shown on my1099-R on my 2020 tax year tax return?  In other words you are saying that because I amended my 2019 return (1040-X) and reported this 1099-R, that I do not have to mention or report anything related to this at all on my 2020 tax year return?

Lee

[DawnC]

Yes, that is correct.   The exception would be if you had withholdings in either Box 4 or 14.   If you enter it on your 2020 return, you will get a message that you will need to amend your 2019 return - which you have already done.   TurboTax won't include the tax again in 2020 because code P in Box 7 indicates that it was taxable on the 2019 return, not this 2020 return you are preparing now.