Two different 1099-R forms, one with code PJ and the other 8J - how to handle?

[jfm2023]

This question is in two-parts:

Part 1:

My wife and I (both age 57) each had Roth IRA contributions in 2023 that we later found out to be in excess because we exceeded the income threshold for married filing jointly. We found this out before we filed our ’23 taxes and reversed out the contributions from our IRA accounts. We then removed the overage amounts from our ’23 returns through the TT software before filing. Now in February of this year (’25) we received from the custodian of our IRAs, 1099-R forms for the both of us with a distribution code of PJ.  The notation on the back of the form says excess contributions plus earnings taxable in 2023. I have read through several posts that are very similar but I am confused about two things. First, do I have to file an amended 2023 return with this new information?  If yes, what am I supposed to add to my amended return to correct it and do I use my current version of TT to file this? Secondly, am I supposed to report this anywhere on my 2024 tax returns?

Part 2:

Once again, my wife and I had Roth IRA contributions in 2024 (they were being automatically invested from the dividends of another asset which we’ve since stopped) that were in excess because we continue to exceed the income threshold.  We’ve reversed out the ’24 contributions from our IRA accounts.  This month (Feb ’25) we received from the custodian of the IRA, 1099-R forms for the both of us with a distribution code of 8J. The notation on the back says excess contributions plus earnings taxable in 2024.  How do I address this when doing this year’s taxes? What do I do with the information on Form 5498 (IRA contribution information) that came from the custodian? If I do have to report an unqualified distribution, will TT calculate a penalty amount for us and do we have to pay it?

[fanfare]

Code P stands for prior

It is telling you to amend your 2023 tax return to add positive allocable earnings if you did not report that already.

negative or zero earnings; no action needed.

The earlier 10% penalty for removal of excess from a Roth before age 59 1/2 is gone now.

you must use 2023 turbotax desktop to  e-File.

[jfm2023]

So if I am showing an amount in box "2a Taxable amount" of my 1099-R then I have to file an amended return?

[DanaB27]

1) Yes, if you have earnings in box 2a and didn't enter a 2024 Form 1099-R with codes P and J on your 2023 return when you originally filed it then you will need to amend your 2023 tax return to add the Form 1099-R with codes P and J. 

You do not need to add the Form 1099-R with codes P and J on your 2024 return unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding. Then you must enter the 2024 Form 1099-R with code P and J into the 2024 tax return since the withholdings are reported in the year that the tax was withheld. The 2024 code P will not do anything to your income to the 2024 tax return income but the withholdings will be applied to 2024.

On your 2023 amended return:

1. Click on the "Search" on the top right and type “1099-R” 
2. Click on “Jump to 1099-R”
3. On the "Which year on Form 1099-R" screen say that this is a 2024 Form 1099-R.
4. Click "Continue" after all 1099-R are entered and answer all the questions.
5. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings (box 2a) under "Corrective distributions made before the due date of the return".

Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2022" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2023.

2) You will enter the 2024 Form 1099-R with codes  8 and J on your 2024 return. Make sure you continue after entering all Form 1099-Rs to get to the "Did you use your IRA to pay for any of these expenses?" screen to enter earnings (box 2a) under "Corrective distributions made before the due date of the return".

You do not need to enter Form 5498 anywhere but keep it for your records.

@jfm2023