Roth IRA Overcontribution Issue- Need Amended Return Help

[pcpatter]

This is complicated AF so bear with me.

In 2019 I made an overcontribution to my Roth and submitted the paperwork to have the excess returned in 2019. The paperwork was completed in 2019. However, the distribution payment was not actually made to me until Jan 2, 2020 so the state and federal withholding I had taken out has plagued me ever since. Since the payment to me happened in 2020, Fidelity did not make me a 1099R until 2021 (and it has the year 2020 on it).  Due to this I had to pay the withholding myself in 2019 since I had no proof that it had been withheld already without the 1099. I also paid the penalty and the income tax on the distribution in 2019.

Fast forward to 2021 when I do have the 1099R. I am now owed that withholding amount back as a refund (since I had to pay it myself in 2019 since I had no proof which was resulted in a double payment). I have sent the 1099R to the government along with my amended 2019 return and it is being rejected. I have code "PJ" in Box 7 on my 1099R.

P--Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2019

J--Early distribution from a Roth IRA, no known exception (in most cases, under age 59 ½)

My question is this: Does code P basically mean that the penalty and income tax is taxable in 2019 but because the 1099R form has the year 2020 on it, I actually have to file a 2020 amended return instead to claim the withholding and get my refund? Then I would ignore the portion of the form detailing the taxable portion of the distribution since this should have been (and was) already paid in 2019, as indicated by code PJ? It is the only reason I can think of for why they are rejecting the 2019 amended return, but it is also odd to me to be claiming two different portions of the same taxable event on two different tax years. 

Thank you for any insight.

[fanfare]

generally,

in tax years where you paid too much tax, file an amendment to get that extra tax back.

in tax years for which the excess was contributed where you included the earnings on a removed excess already based on your own records, you can ignore the 1099-R, assuming you did it correctly.

BUT

if you actually had withholding on those earnings, but did not account for it,

then you have to amend.

there is a 10% penalty on the earnings if you are under 59 1/2.

based on the IRS backlog it could be nine months or more before your 1040-x is completed by IRS.

[pcpatter]

That is where it gets so complicated. I accounted for both in 2019. The government accepted my payment of the penalty and income tax amd rejected my withholding amount because i had no 1099R to prove it. So i had to pay that withholding after filing so as not to owe money.

Now that i have the 1099R, i sent it in as proof of that initial claim and it is being rejected. So im wondering if because the 1099R has the year 2020 on it, despite the PJ code in Box7, if I need to file 2020 amended not 2019 amended in order to report the withholding and get the refund. It is the only thing I can think of left to try besides getting a tax attorney.

[pcpatter]

Complicating it further, i used turbo tax to file 2020 and their software wont ignore the income portion of the 1099R and just add the withholding so i can at least efile not paper file the amendment and i cant figure out a way around that which is one more reason splitting the tax event across 2 years seems incorrect.

[fanfare]

It is no longer possible to e-File form 1040-X for prior years.

You mailed away your 1099-R which you would need to attach to your 2019 1040-X to get the overpayment back.

If possible, get another copy from your custodian website and print it. Or use the State copy.

Based on what you said, 2020 is not involved; a 2020 1040-X won't help you. Sending that would just make more of a mess.

See IRS web-site to log in and "View your account" and find out what amounts IRS has credited to your 2019 tax return.

[pcpatter]

I actually found a thread on turbotax that dealt with my exact issue. I pay the penalty and income tax for 2019 because that is when the event occurred (and I already did this). Because my 1099R form has the year 2020 with code PJ in Box 7 I need to file an amended 2020 to report the withholding taken out of the return of excess. 2019 will remain as is.

[fanfare]

"I have sent the 1099R to the government along with my amended 2019 return and it is being rejected."

Wat did the IRS letter say as reason for rejected?

maybe you did not fill out the amendment 1040-X correctly.

[fanfare]

"I actually found a thread on turbotax that dealt with my exact issue"

I see you have found a way forward. 

Good Luck.