Need help on 1099-R

[wxhuangtt]

I contributed $6000 to a traditional IRA account on $12/31/2020. Then $6105.43 was returned back to me on 1/7/2021. I received a 1099-R form on 1/14/2022.

When I was preparing my 2021 tax return with turbotax, I was asked the question below after importing the 1099-R form.

Which Year on Form 1099-R? Look at the Year on Form 1099-R, Does it show 2021 or 2002 (Note: The year on your 1099-R will not necessarily be the year in which the contribution was made.)

if I chose 2021: It looks like you may need to Amend your 2020 Return. Here is why: Your 1099-R reports earnings on a contribution you made in 2020. This information needs to go on your 20202 return. If you have already filed your 2020 return, then you'll need to amend it.

What exactly do I need to do to amend my 2020? How do I report this 1099-R to IRS, on 2020 or 2021 tax form? 

Below are a few details on the 1099-R form
Box 1 (Gross Distribution) 6105.43)
Box 2a (Taxable Amount) 105.43
Box 7 P1 (P-Return of contribution taxable in 2020, 1-Early Distribution) IRA/SEP/SIMPLE box checked

[macuser_22]

What year is on the top of your 1099-R?  If issued in 2022 it should be 2022 so you answer the question  that it is a 2022 1099-R.  (A 2021 1099-R would not have  code P.)

[wxhuangtt]

The Year on top of the Form is 2021. (Near OMB No. ***). Usually, most of the forms issued in 2022 are for tax year 2021, correct?

I think I need to select 2021 for the TurboTax question but turbo tax didn't tell me what exactly I need to do to amend my 2020 tax return. I filed my 2020 tax return with turbo tax as well.  Thanks! 

[fanfare]

@wxhuangtt 

"P-Return of contribution taxable in 2020"

That tells you to amend your 2020 tax return.

only the earnings are taxable, report on 1040 Line 4b

If you are younger than 59 1/2 there is also a 10% penalty for early distribution.

With 1040-X, do not include your old 1040 nor your revised 1040 because the Form 1040-X reflects any changes there and becomes your new tax return.

[dmertz]

The $105.43 is taxable and subject to a 10% early distribution penalty on your 2020 tax return.  If your 2020 tax return does not already include the $105 on Form 1040 line 4b and the $11 penalty on Schedule 2 line 6, you must amend your 2020 tax return and add this 2021 Form 1099-R.

[wxhuangtt]

Thank you! I went back to my 2020 version of turbo tax and tried to amend my 2020 tax return as you suggested. It seems to be working as you suggested. However, I encountered another two problems. (1) I can not type in the distribution code in box 7 of the 20211099-R form as is. I have code P in the 2021 form, if I type in P in the 2020 version of the turbo tax, it will be interpreted as return of contribution taxable in 2019. So I have to use code 8 instead, which is corresponding to return of contribution taxable in 2020. (2) Turbo-Tax shows that I need to pay $300 MA state tax for my state tax amendment. I think it is wrong. I would think only the $105 is taxable, not the $6000 distribution. However, TurboTax seems to calculate the tax on the $6000 rather than the $105. 

[macuser_22]

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@wxhuangtt wrote:

Thank you! I went back to my 2020 version of turbo tax and tried to amend my 2020 tax return as you suggested. It seems to be working as you suggested. However, I encountered another two problems. (1) I can not type in the distribution code in box 7 of the 20211099-R form as is. I have code P in the 2021 form, if I type in P in the 2020 version of the turbo tax, it will be interpreted as return of contribution taxable in 2019. So I have to use code 8 instead, which is corresponding to return of contribution taxable in 2020. (2) Turbo-Tax shows that I need to pay $300 MA state tax for my state tax amendment. I think it is wrong. I would think only the $105 is taxable, not the $6000 distribution. However, TurboTax seems to calculate the tax on the $6000 rather than the $105. 

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When you enter a 2021 1099-R with a code P it will ask if it is a 2020 or 2021 1099-R - say 2021, that advances the year by 1.     Every year code P advances by 1 so a 2021 means taxable in 2020.    The TurboTax software assumes it is a 2020 1099-R so the year is 2019 but when you tell it is 2021 then it will apply it to 2020.