Return of Overcontribution to Roth IRA TurboTax entry

[kuehngh]

In 2020 I contributed $1,000 to my Roth IRA not knowing that my income was too high to contribute, so all $1,000 was considered an overcontribution.

In February 2021 (before filing taxes) I withdrew the excess $1,000 contribution as well as the NIA of $160.

I have a few questions as it relates to this in terms of filing my 2020 taxes:

• Do I need to put anything in the retirement Income area of TurboTax for my 2020 taxes in relation to this withdraw?
  • Since I technically withdrew the funds in 2021, should I expect to get a 1099-R for my 2021 tax year instead?
• On the Deductions and Credits regarding retirement contributions, I put in the $1,000 for my Roth retirement contribution.  Regarding the "Contribution withdrawn before due date of your return", should this be $1,000 or $1,160?  

Thank you.

[DanaB27]

In the Deduction & Credit section you will enter $1,000 for the  "Contribution withdrawn before due date of your return".

You will get a 1099-R 2021 in 2022 with codes P and J in box 7 for the withdrawal of excess contribution and earnings. 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:

1. Login to your TurboTax Account 
2. Click on the Search box on the top and type “1099-R”
3. Click on “Jump to 1099-R”
4. Answer "Yes" to "Did you get a 1099-R in 2020?"
5. Select "I'll type it in myself"
6. Box 1 enter total distribution (contribution plus earning)
7. Box 2 enter the earnings
8. Box 7 enter P and J 
9. Click "Continue"
10. On the "Which year on Form 1099-R" screen say that this is a 2021 1099-R.

[kuehngh]

Thank you, this is helpful. 

I am going to attempt to go the route of completing at 1099-R now as I do not want to have to append at a later date.  Plus I did not withhold any taxes as part of the withdrawal, so I shouldn't have to do anything with that.

Box 1 I am entering $1,159.78

Box 2 I am entering $159.78

Question on Box 7.  The "P" says Return of contribution taxable in 2019.  That doesn't see correct.  Wouldn't this be Return of contribution taxable in 2020 (option 8)?  Or is the idea that I am doing this ahead of time and for my 2021 1099-R  Code P will have changed to represent 2020 instead of 2019?

[DanaB27]

No, please select code "P" and then click continue after you entered all 1099-R information. You will see the "Which year on Form 1099-R" screen  where you can say that this is a 2021 1099-R. Then code P means Return of contribution taxable in 2020.