Not eligible for roth contribution after marriage

Forum|Forum|2 years ago
April 5, 2024
1 reply
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Hi,

My wife and I got married in 2023. She was contributing to Roth for 2023. Our joint income is higher than the limit for Roth contribution, and thus we are not eligible for Roth anymore. So, my wife withdrew her 2023 contributions. She has not received a form 1099-R. I'm filling our 2023 tax jointly, and I'm confused on how I could report this situation to avoid any penalties. I searched the web and couldn't find anything. Can someone help please?

Thank you in advance!

DanaB27

You will get a 2024 Form 1099-R in 2025 with codes P and J for the withdrawal of the excess Roth IRA contribution made in 2023 plus earnings. This 1099-R will have to be included on your 2023 tax return and you have two options:

You can wait until you receive the 2024 Form 1099-R in 2025 and amend your 2023 return or
You can report it now in your 2023 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 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 the 2024 tax return income but the withholdings will be applied to 2024.

To create a Form 1099-R in your 2023 return please follow the steps below:

Login to your TurboTax Account
Click on the "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”
Answer "Yes" to "Did you get a 1099-R in 2023?"
Select "I'll type it in myself"
Box 1 enter total distribution (contribution plus earning)
Box 2a enter the earnings
Box 7 enter J and P
Click "Continue"
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.

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momo20Author

Hi @DanaB27 , thank you so much for your help. I have a couple of follow-up questions.
1- "Who gave you a 1099-R?", should this be the "Financial institution" if I had this with Fidelity?
2- "Is the IRA/SEP/SIMPLE box on this 1099-R checked?", is the answer here "No, the box is blank"?
3- I have "Do any of these situations apply to you?", should I say "None of these apply"?
4- I don't have the question "Did you use your IRA to pay for any of these expenses?", what should I do?

DanaB27

Yes, you select Financial institution
Yes, the IRA/SEP/SIMPLE box is blank and you will answer "No, the box is blank"?
Yes, you will select "None of these apply"
If you did not have any earnings ($0 in box 2a) then you will not get the screen "Did you use your IRA to pay for any of these expenses?". If you had earnings, please make sure you click continue after entering all Form 1099-Rs to get to the screen.

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