2023 1099R Received for JP (J-Early Distribution from Roth IRA / P-Return of contribution taxable in 2022)

[snwong79]

Hello,

I contributed $7000 towards my Roth IRA in year 2022.  But before the year ended, I realized I did not qualify due to sale of a property.  Merrill Lynch had me submitted a document to distribute excess contribution for year 2022 before 4/15/2023.  They also advised me to check the transactions and let them know if any gains/losses.  I calculated it with a loss of $965.19 so they transferred $6,034.81 to me instead of $7,000.

So now I received a 2023 1099R for $6,035 coded JP (J-Early Distribution from Roth IRA / P-Return of contribution taxable in 2022).  Per 2023 Turbotax, since this applied to year 2022, this information needs to go on my 2022 return and that I need to file an amendment for 2022.

• Year 2023 return:  Do I need to enter any of this on my Year 2023 return?
• Year 2022 return:  Since I mistakenly thought it was a WASH transaction – I did NOT report contribution/distribution when I filed last year
  1.  So for the amended return, do I need to report the contribution $7000 to ROTH IRA? 
  2.  Then do I report the $7000 distribution or the actual amount I received $6035? 
  3.   If I report the amount $6035 received from the 1099R?  What about the loss $965 from investment?
• Year 2022:  how do I do an amended return?

Your assistance is greatly appreciated :-).

Thank you!

Sally

[DanaB27 · Accepted solution]

No, you do not need to enter the 2023 Form 1099-R with code JP on your 2023 return since you had no taxes withheld. For your information, if you entered the form already then you do no need to remove it since the 2023 code P will not do anything to the 2023 tax return income but it will apply any tax withholdings to 2023. 

No, you do not need to amend your 2022 tax return. You do not need to enter contribution since you withdrew the contribution before the due date. You also don't need enter the Form 1099-R with code JP on your 2022 return because it will not change anything on the 2022 return since you had a loss. You had no taxable event since only earnings are taxable with the return of excess contributions. All that TurboTax would do is add an explanation statement. 

The loss isn't deductible.

[snwong79]

Thank you so much DanaB27!  You've addressed and answered all my questions :-).  Much appreciated!

[ljsister2024]

Thank you @DanaB27  my situation is similar, I returned excess contribution to roth IRA before tax return deadline in 2023, and I have a loss; I received 1099R with PJ in 2024, Turbotax 2023 asks me to amend my 2022 return.

Following your explanation here, I think I don't need to amend 2022 return since I returned it before the deadline and with a loss of 20 USD, and my 2a shows 0.

Correct? 

[DanaB27]

Yes, that is correct. You don't need to amend your 2022 tax return since with a loss you have no taxable income to report. All that TurboTax would do is add an explanation statement when you enter the Form 1099-R with PJ with a loss.

@ljsister2024 

[ljsister2024]

Thanks a lot for your advice. @DanaB27 

[tes5]

I have a similar situation but with a gain on the excess contribution. Can I calculate the gain and include it as income on this year's tax return, or do I have to wait until I receive the 1099-R JP next year and amend my 2023 tax return?

[DanaB27]

Yes, you can include it on this year's return if you want to avoid amending your 2023 return.

You will get a 2024 Form 1099-R in 2025 with codes P and J for the withdrawal of the excess Roth IRA contribution made in 2023 plus earnings. This 1099-R will have to be included on your 2023 tax return and you have two options:  

• You can wait until you receive the 2024 Form 1099-R in 2025 and amend your 2023 return or
• You can report it now in your 2023 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 2024 Form 1099-R into the 2024 tax return since the withholdings are reported in the year that the tax was withheld. The 2024 code P will not do anything to the 2024 tax return income but the withholdings will be applied to 2024.

To create a Form 1099-R in your 2023 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 2023?"
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 2024 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 "Corrective distributions made before the due date of the return".

Please be aware, 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.

@tes5 

[Chuck1959]

I am processing a 2024 return with the same issue. I input the 1099R data into Turbo Tax with the Codes J and P. Why doesn't Turbo Tax populate line 5a and b on Form 1040 showing the gross distribution for the Roth distribution and that $0 was taxable on line 5b? Won't that cause the IRS to question why the amount was not reported on line 5a and 5b?

[RobertB4444]

The distribution should be listed on 4a for IRA distributions.  4b should still be zero since the distribution is not taxable.

@Chuck1959 

[Chuck1959]

Turbo Tax Deluxe is not automatically populating 4a IRA Distribution and 4b Taxable Amount for this 1099R inputted info.  I don't know why. Shouldn't Turbo Tax software auto populate these lines?  I guess I can manually edit the 4a and 4b cells on Form 1040. Anything I am missing in order for these lines to be automatically populated from the data I inputted from the 1099R?

[BillM223]

The counterintuitive IRS instructions for lines 4a and 5a on the 1040 stipulate that there are situations in which you do not enter a total in these lines. We have received these comments for years that TurboTax does not always populate lines 4a and 5a but it turns out that it is correct not to.

You should, of course, have entries in lines 4b and 5b as required. Do you have any taxable IRA distributions that do not appear in line 4a?

@Chuck1959 

[Durgo]

A bit of a similar situation here with some added complexity. I had accidental excess contributions to a Roth IRA in 2022 and 2023. Unfortunately, I didn't recognize the issue until March 2024 when I withdrew the excess for 2022 ($660) and the excess plus earnings for 2023 ($4952 with $623 being taxable). Now I have two 1099-Rs. One showing the $660 with distribution code J and the other showing the $4952 with distribution codes JP.

How do I proceed? I assume, but am not certain, that I file the $660 1099-R with my current year's taxes (2024) and file the $4952 1099-R with an amended return for 2023. Since I did withhold federal income tax I understand from other guidance that I also need to file the 1099-R with my current year's taxes.

To add further complexity, I'm confused how to proceed with amending my state returns to reflect the $623 in taxable income since, unfortunately, we also moved in 2023 and had to file state taxes with both DC and Maryland. How would I handle amending those returns? Would I split the taxable amount evenly between the two? By the time I withdrew the $4952 in March 2024, we were living in Maryland if that helps at all...

@DanaB27 

[DanaB27]

Yes, the 2024 Form 1099-R with code J for $660 excess for 2022 will be reported on your 2024 tax return:

1. Login to your TurboTax Account 
2. Click on "Search" on the top and type “1099-R” 
3. Click on “Jump to 1099-R” and enter all your 1099-Rs
4. Click "Continue" on the "Review your 1099-R info" screen after you entered all you Form 1099-R
5. Answer "Owned Any Roth IRA for Five Years?" screen
6. Continue through the questions and make sure you enter the net contributions prior to 2024 on the "Enter Prior Year Roth IRA Contributions" screen (include the 2022 excess in this net contribution).

The 2023 Form 1099-R with codes JP belong on your 2023 tax turn and you do not need to enter it on the 2024 return unless unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding. Then you must enter the 2024 Form 1099-R into the 2024 tax return since the withholdings are reported in the year that the tax was withheld. The 2024 code P will not do anything to your income to the 2024 tax return income but the withholdings will be applied to 2024.

If you didn't enter a Form 1099-R with codes JP for the excess and earnings when you filed the 2023 return then you will need to amend your 2023 tax return. Please see How do I amend my federal tax return for a prior year?

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. On the "Which year on Form 1099-R" screen say that this is a 2024 Form 1099-R.
5. Click "Continue" after all 1099-R are entered and answer all the questions.
6. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return".

Please be aware, 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.

You would allocate it to Maryland.

@Durgo