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 To avoid the 6% I reached out to the brokerage company in 2021 and have already withdrawn the contributions along with the earnings on them.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 Should I complete this questionnaire even though they have been withdrawn, and will this ultimately complete form 5329 and other needed forms for me on the backend?Thanks in advance for the help!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"

TurboTax

File with experts
File your taxes
Experts at your fingertips

An expert helps with your taxes, or does them for you
TurboTax Expert Full Service

TurboTax Expert Assist

TurboTax Self-Employed
Prior year taxes
File myself
File myself
Do it yourself

We'll guide you step-by-step
TurboTax Do It Yourself

TurboTax Self-Employed

TurboTax Desktop
TurboTax Free

Activate your product

Prior year taxes
Business
Business
Business taxes

Get your T2 corporate return done right, your way
TurboTax Business

TurboTax Business Desktop
Tax situations
Tax situations
Tax situations

Find extra guidance for your big life moves
For investors

For 25 and younger

For self-employed

For new to Canada

For life changes
Resources
Resources
Resources

Explore tax tools, get tips, and read reviews
Personal income tax calculator

RRSP savings calculator

Learning hub

TurboTax support (FAQ)

TurboTax community
Pricing

CRL

Level 2

Solved

Reporting excess Roth IRA Contribution

Forum|Forum|5 years ago
February 10, 2021
1 reply
0 views

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"

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

CRLAuthor

Level 2

Thank you so much for the help. I have gone through these steps and have a couple follow-up questions:

At the top of the 1099-R easy steps there is a place for Payer Name, Address, and Federal ID Number. Should this be left blank?
Selecting P notes "P-Return of contribution taxable in 2019". Should this say 2020?
Under the deductions easy steps tab, there is a question "Did you make a Roth contribution for 2020". If I go through the steps it asks me about excess contributions and withdrawals. Is this a form I should go through? I did it as a test, and it drastically lowered my Federal Refund amount.

Thanks again!

DanaB27

Level 15

1) Try to get this information from your bank if possible.

2) No, just select the code P (Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 20XX/ prior year). Remember we are entering/creating a 2021 1099-R and the code P on that form means "Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2020". You will indicate that it is a 2021 1099-R on the "Which year on Form 1099-R" screen.

3)Yes, enter your Roth contribution and the withdrawal under Deduction tab.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"