For tax year 2020 I contributed after-tax dollars to a Roth IRA account to later find out I was not eligible to make this contribution. To avoid the 6% I reached out to the brokerage company in 2021 and have already withdrawn the contributions along with the earnings on them. They informed me I would receive a 1099-R in 2022 that indicates this access contribution removal, but I should report the earnings as income on form 1040, and fill out form 5329 for my 2020 return. This leads me to a few questions:Is the advice on what forms to complete correctly?If the answer to 1 is "Yes", how can I achieve this using TurboTax Premier 2020 Desktop VersionSince I am under the age to make withdrawals I believe I owe a 10% penalty on the earnings. Where should this be reported?Within the federal deductions & credits section, I see an option to report contributions to a Roth IRA. Should I complete this questionnaire even though they have been withdrawn, and will this ultimately complete form 5329 and other needed forms for me on the backend?Thanks in advance for the help!

You will get a 1099-R 2021 in 2022 with codes P and J. This 1099-R will have to be included on your 2020 tax return and you have two options: You can wait until you receive the 1099-R 2021 in 2022 and amend your 2020 return or You can report it now in your 2020 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 2021 1099-R into the 2021 tax return since the withholding is reported in the year that the tax was withheld. The 2021 code P will not do anything in 2021 tax return but the withholding will be applied to 2021. To create a 1099-R in your 2020 return please follow the steps below: Open your return Click on the "Search" on the top and type “1099-R” Click on “Jump to 1099-R” Select "I'll type it in myself" Box 1 enter total distribution (contribution plus earning) Box 2 enter the earnings Box 7 enter P and J On the "Which year on Form 1099-R" screen say that this is a 2021 1099-R. Yes, you will have to pay the 10% penalty on the earnings. This will trigger Form 5329 in TurboTax. Yes, enter the Roth contribution and withdrawal of excess contribution in the Deduction & Credit section. Click on the "Search" on the top and type “IRA contributions” Click on “Jump to IRA contributions"

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Solved

Reporting excess Roth IRA Contribution

Forum|Forum|5 years ago
February 10, 2021
1 reply
1 view

For tax year 2020 I contributed after-tax dollars to a Roth IRA account to later find out I was not eligible to make this contribution. To avoid the 6% I reached out to the brokerage company in 2021 and have already withdrawn the contributions along with the earnings on them. They informed me I would receive a 1099-R in 2022 that indicates this access contribution removal, but I should report the earnings as income on form 1040, and fill out form 5329 for my 2020 return.

This leads me to a few questions:

Is the advice on what forms to complete correctly?
If the answer to 1 is "Yes", how can I achieve this using TurboTax Premier 2020 Desktop Version
Since I am under the age to make withdrawals I believe I owe a 10% penalty on the earnings. Where should this be reported?
Within the federal deductions & credits section, I see an option to report contributions to a Roth IRA. Should I complete this questionnaire even though they have been withdrawn, and will this ultimately complete form 5329 and other needed forms for me on the backend?

Thanks in advance for the help!

Best answer by DanaB27

You will get a 1099-R 2021 in 2022 with codes P and J. This 1099-R will have to be included on your 2020 tax return and you have two options:

You can wait until you receive the 1099-R 2021 in 2022 and amend your 2020 return or
You can report it now in your 2020 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 2021 1099-R into the 2021 tax return since the withholding is reported in the year that the tax was withheld. The 2021 code P will not do anything in 2021 tax return but the withholding will be applied to 2021.

To create a 1099-R in your 2020 return please follow the steps below:

Open your return
Click on the "Search" on the top and type “1099-R”
Click on “Jump to 1099-R”
Select "I'll type it in myself"
Box 1 enter total distribution (contribution plus earning)
Box 2 enter the earnings
Box 7 enter P and J
On the "Which year on Form 1099-R" screen say that this is a 2021 1099-R.

Yes, you will have to pay the 10% penalty on the earnings. This will trigger Form 5329 in TurboTax.

Yes, enter the Roth contribution and withdrawal of excess contribution in the Deduction & Credit section.

Click on the "Search" on the top and type “IRA contributions”
Click on “Jump to IRA contributions"

DanaB27Answer

Level 15

You will get a 1099-R 2021 in 2022 with codes P and J. This 1099-R will have to be included on your 2020 tax return and you have two options:

You can wait until you receive the 1099-R 2021 in 2022 and amend your 2020 return or
You can report it now in your 2020 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 2021 1099-R into the 2021 tax return since the withholding is reported in the year that the tax was withheld. The 2021 code P will not do anything in 2021 tax return but the withholding will be applied to 2021.

To create a 1099-R in your 2020 return please follow the steps below:

Open your return
Click on the "Search" on the top and type “1099-R”
Click on “Jump to 1099-R”
Select "I'll type it in myself"
Box 1 enter total distribution (contribution plus earning)
Box 2 enter the earnings
Box 7 enter P and J
On the "Which year on Form 1099-R" screen say that this is a 2021 1099-R.

Yes, you will have to pay the 10% penalty on the earnings. This will trigger Form 5329 in TurboTax.

Yes, enter the Roth contribution and withdrawal of excess contribution in the Deduction & Credit section.

Click on the "Search" on the top and type “IRA contributions”
Click on “Jump to IRA contributions"

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Anonymous

Hi there - I made an excess Roth IRA contribution in 2021, which I caught when starting to fill in my 2021 return in Jan 2022. I immediately contacted my financial institution and removed the excess. I had no earnings on the excess so they removed about $100 less than my over contribution amount. Do I submit a 1099-R for my 2021 return even though my financial institution says I won't receive it until Jan 2023? Since I have no earnings, do I still use codes P & J?

Harvest704

Level 2

Please use codes 1 and P.

You only entered the distribution in box 1 ($6,700) and $0 in box 2a, correct?

Please verify, that the distribution is only listed on 4a but not 4b on Form 1040. It should not be taxable since only earnings are taxable and you had a loss.

[Edited 2/21/2022 | 10:36am PST]

@Harvest704

Yes, $6700 for box 1 and $0 for box 2. What form for 4a and 4b? I'm sorry I didn't explain better. Both my husband and I had excess contributions. I'm under 59 and he is over. Both get P and 1 in box 7?