Roth withdrawal

[Taxtime2000]

Hello. I have a Roth for about 10 years now. I found out that I was not qualified to contribute for 2020, 2021, and 2022. I asked for the excess to be withdrawn after I already filed my 2021 tax. In 2023 I received three 1099R. One with 8, J codes, one with J code, and one with J,P codes. I entered all three forms into Turbo when I’m doing my tax this year, and haven’t amended my 2021 tax yet. I have several questions. 1) do I need to amend my 2021 tax before I do my 2022? 2) for the box Roth IRA contributions prior to 2022, do I take all my contributions in prior years minus 18000 for those three years (my contributions ended up to be a loss) so the amount shown in 1099R gross distribution are less than what I actually contributed. On the box excess Roth IRA contributions for prior years do I include 2021 excess also even though I haven’t filed the amended return? Thanks. 

[MaryK4 · Accepted solution]

1. You do not have to wait for the IRS to process the 2021 tax return before preparing your 2022 tax return.  2. Because you removed the excess contribution, you subtract the 18000 for prior years.  3. For the box excess Roth IRA contributions for prior years you do NOT include the 2021 excess if you send your 2021 amendment (I would recommend certified mail if you do not e-file to have proof of date which will apply regardless if how long it takes the IRS to process the amendment) before you prepare the 2022 return.

[Taxtime2000]

Thank you!

[Taxtime2000]

Actually, I have one more question. Do I need to amend 2020 tax return for the 2020 excess,  like I need to do for 2021 tax return? 

[DanaB27]

It depends if your 2020 tax return shows the 6% penalty on your 2020 Form 5329 IV. If yes, then you do not need to amend your 2020 tax return.

The Form 2022 1099-R with code JP will have to be included on your 2021 tax return. The earnings in box 2a will be taxable income and subject to the 10% early withdrawal penalty (if you are under 59 ½). Additionally, you will have to pay the 6% penalty for the 2020 excess contribution on Form 5329 IV. But you don’t pay the 6% penalty for the 2021 excess since you removed it before the extended due date. Please make sure you enter that you removed the 2021 excess contribution during the IRA contribution interview (on the penalty screen).

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. On the "Do you have any Excess Roth Contributions" answer "Yes"
5. Enter your Roth contribution for 2021
6. On the "Enter Excess Contributions" screen enter the total excess contribution from 2020 (if it wasn't carried over).
7. On the Penalty screen enter the 2021 contribution as removed by the due date.

Please be aware, on your 2022 tax return you will have to include the 2020 excess contribution in net contributions prior to 2022 when TurboTax asks since the excess for 2020 wasn’t removed by the 2020 due date and is now removed in 2022 as a regular distribution (Form 1099-R code J):

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
5. Answer all the questions and make sure you enter the net contributions prior to 2022 on the "Enter Prior Year Roth IRA Contributions" screen (include the 2020 excess but not the 2021 and 2022 excess).
6. Answer the remaining question.

@Taxtime2000