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2023 1099R Received for JP (J-Early Distribution from Roth IRA / P-Return of contribution taxable in 2022)

Forum|Forum|2 years ago
March 5, 2024
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Hello,

I contributed $7000 towards my Roth IRA in year 2022. But before the year ended, I realized I did not qualify due to sale of a property. Merrill Lynch had me submitted a document to distribute excess contribution for year 2022 before 4/15/2023. They also advised me to check the transactions and let them know if any gains/losses. I calculated it with a loss of $965.19 so they transferred $6,034.81 to me instead of $7,000.

So now I received a 2023 1099R for $6,035 coded JP (J-Early Distribution from Roth IRA / P-Return of contribution taxable in 2022). Per 2023 Turbotax, since this applied to year 2022, this information needs to go on my 2022 return and that I need to file an amendment for 2022.

Year 2023 return: Do I need to enter any of this on my Year 2023 return?
Year 2022 return: Since I mistakenly thought it was a WASH transaction – I did NOT report contribution/distribution when I filed last year
1. So for the amended return, do I need to report the contribution $7000 to ROTH IRA?
2. Then do I report the $7000 distribution or the actual amount I received $6035?
3. If I report the amount $6035 received from the 1099R? What about the loss $965 from investment?
Year 2022: how do I do an amended return?

Your assistance is greatly appreciated :-).

Thank you!

Sally

Best answer by DanaB27

No, you do not need to enter the 2023 Form 1099-R with code JP on your 2023 return since you had no taxes withheld. For your information, if you entered the form already then you do no need to remove it since the 2023 code P will not do anything to the 2023 tax return income but it will apply any tax withholdings to 2023.

No, you do not need to amend your 2022 tax return. You do not need to enter contribution since you withdrew the contribution before the due date. You also don't need enter the Form 1099-R with code JP on your 2022 return because it will not change anything on the 2022 return since you had a loss. You had no taxable event since only earnings are taxable with the return of excess contributions. All that TurboTax would do is add an explanation statement.

The loss isn't deductible.

D

DanaB27Answer

No, you do not need to enter the 2023 Form 1099-R with code JP on your 2023 return since you had no taxes withheld. For your information, if you entered the form already then you do no need to remove it since the 2023 code P will not do anything to the 2023 tax return income but it will apply any tax withholdings to 2023.

No, you do not need to amend your 2022 tax return. You do not need to enter contribution since you withdrew the contribution before the due date. You also don't need enter the Form 1099-R with code JP on your 2022 return because it will not change anything on the 2022 return since you had a loss. You had no taxable event since only earnings are taxable with the return of excess contributions. All that TurboTax would do is add an explanation statement.

The loss isn't deductible.

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S

snwong79Author

Thank you so much DanaB27! You've addressed and answered all my questions :-). Much appreciated!

D

Durgo

A bit of a similar situation here with some added complexity. I had accidental excess contributions to a Roth IRA in 2022 and 2023. Unfortunately, I didn't recognize the issue until March 2024 when I withdrew the excess for 2022 ($660) and the excess plus earnings for 2023 ($4952 with $623 being taxable). Now I have two 1099-Rs. One showing the $660 with distribution code J and the other showing the $4952 with distribution codes JP.

How do I proceed? I assume, but am not certain, that I file the $660 1099-R with my current year's taxes (2024) and file the $4952 1099-R with an amended return for 2023. Since I did withhold federal income tax I understand from other guidance that I also need to file the 1099-R with my current year's taxes.

To add further complexity, I'm confused how to proceed with amending my state returns to reflect the $623 in taxable income since, unfortunately, we also moved in 2023 and had to file state taxes with both DC and Maryland. How would I handle amending those returns? Would I split the taxable amount evenly between the two? By the time I withdrew the $4952 in March 2024, we were living in Maryland if that helps at all...

@DanaB27

D

DanaB27

Yes, the 2024 Form 1099-R with code J for $660 excess for 2022 will be reported on your 2024 tax return:

Login to your TurboTax Account
Click on "Search" on the top and type “1099-R”
Click on “Jump to 1099-R” and enter all your 1099-Rs
Click "Continue" on the "Review your 1099-R info" screen after you entered all you Form 1099-R
Answer "Owned Any Roth IRA for Five Years?" screen
Continue through the questions and make sure you enter the net contributions prior to 2024 on the "Enter Prior Year Roth IRA Contributions" screen (include the 2022 excess in this net contribution).

The 2023 Form 1099-R with codes JP belong on your 2023 tax turn and you do not need to enter it on the 2024 return unless unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding. Then you must enter the 2024 Form 1099-R 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.

If you didn't enter a Form 1099-R with codes JP for the excess and earnings when you filed the 2023 return then you will need to amend your 2023 tax return. Please see How do I amend my federal tax return for a prior year?

Login to your TurboTax Account
Click on the "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”
On the "Which year on Form 1099-R" screen say that this is a 2024 Form 1099-R.
Click "Continue" after all 1099-R are entered and answer all the questions.
Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings 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.

You would allocate it to Maryland.

@Durgo

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