Received 1099-R for Roth IRA Withdrawal. Do I have to amend previous year?

[shmuey529]

In 2020 I contributed to my Roth IRA, married, and then realized I would be ineligible to contribute to a Roth IRA as we intended to file taxes jointly and exceeded the income limit. In January 2021 I withdrew the 2020 contributions and interest, and received a 1099-R in January 2022 for tax year 2021. I entered this information on my most recent tax return. Do I have to do anything else for tax year 2020? I have received conflicting advice and am unsure.

[DanaB27]

Yes, if your Form 1099-R has the code PJ then you will have to amend your 2020 tax return to report the distribution. Only the earnings will be taxable and subject to the 10% early withdrawal penalty if you are under 59 1/2.

1. Click on the "Search" on the top right and type “1099-R” 
2. Click on “Jump to 1099-R”
3. Enter you 1099-R
4. Click "Continue"
5. On the "Which year on Form 1099-R" screen say that this is a 2021 Form 1099-R.
6. Click "Continue" after all 1099-R are entered and answer all the questions.
7. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Another reason" if you are over 59 1/2 (if you are under 59 1/2 click "Continue"

Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2019" you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2020.

[shmuey529]

Just so I understand clearly, when I entered it on my 2021 return, was I not taxed on those earnings? And if not, was the 2021 entry just for informational purpose.

[DanaB27]

Yes, code P will not do anything to the 2021 tax return in regards to income but any tax withholdings will be applied to 2021.

A 2021 Form 1099-R with codes PJ belongs on the 2020 tax return.

@shmuey529