Excess contribution into Roth in 2020, pulled out in 2021, no 1099-R - best way to handle/report before filing for 2020

[ue1]

Made an excess contribution to my Roth in 2020.

Pulled the excess + earning in 2021.

Did not get a 1099-R.

What is the best way to report it on my taxes for 2020, ideally - without having to amend it in the 2021 taxes?

[MaryM428]

Your earnings will be reported in 2021.

On your 2020 tax return, you will enter into TurboTax the full contribution that you made in 2020.  TurboTax will tell you that it is too much and then you will tell TurboTax that you withdrew the excess before the deadline to do so.
 

Next year the entire amount of the withdrawal plus earnings will be on the 1099-R but the codes on it will tell TT how to treat it so that only the earnings are taxed.  (there is a code for return of prior year excess contribution so that it essentially gets ignored).

[ue1]

Hi MaryM428,

Thanks for your reply. The IRS guide for code P ... "The IRS suggests that anyone using Code P for the refund of an IRA contribution under section 408(d)(4), including excess Roth IRA contributions, advise payees, at the time the distribution is made, that the earnings are taxable in the year in which the contributions were made."

Sounds like the earnings need to be taxed in the same year the contribution (not distribution) was made.

What am I missing?

[ThomasM125]

Yes, you should report the earnings in 2020, that is what the code P will mean when you receive the 1099-R next year. So, you can do it now or amend the return later, but best to do it now.

You will see an option in TurboTax to create a substitute 1099-R form on the screen that says Tell us Which 1099-R you have when you go into the retirement distribution section. Enter the income in box 1 and box 2 and "8" in box 7.