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Trying to figure out how to handle and report excess contribution to roth IRA That has been returned by firm before the filing deadline

Forum|Forum|6 years ago
February 20, 2020
2 replies
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went over by 2103 for the year, now I am trying to figure out how to report the returned amount and the taxable gain on that portion which is now income. I was told to add a note explaining it to the tax return but I am not sure if I can do that while efiling or if instead I will need to send in my return alongside the note by certified mail

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Best answer by fanfare

Or you can do nothing and wait for the actual 1099-R.

In that case you'll have to amend your 2019 return in 2021.

Note: The explaining codes will be sent to the IRS in 2021.

Note: desktop version allows an e-Filed explanation statement for IRAs. But Online did not in the past.

I don't know if this has been rectified for 2019.

D

DianeC958

If you have removed the excess amount you report it on your return as a substitute 1099-R. The taxable amount in Box 2 is the amount of income that they excess contribution earned.

The codes you need to use for Box 7 are 2 and 8.

You do not need to include note with your return as the codes explain why you are reporting the 1099-R.

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fanfareAnswer

Employee

Or you can do nothing and wait for the actual 1099-R.

In that case you'll have to amend your 2019 return in 2021.

Note: The explaining codes will be sent to the IRS in 2021.

Note: desktop version allows an e-Filed explanation statement for IRAs. But Online did not in the past.

I don't know if this has been rectified for 2019.

D

doublebbuck64e9Author

actually need to report the withdraw of excess on 2020 even though it was for funds marked for the 2019 contribution year since it was removed in feb took a year to find that out after it already took 2 weeks for figure out how all the data to substitute the from, time to ammend

ReneeM7122

To report the withdrawal of the excess contribution, you will create a substitute 1099-R. Here's how:

Enter the 1099-R with the total distribution in box 1 [the contribution plus the earnings]
Enter the earnings in box 2a
Enter code "P" in box 7 (Top)
Enter code "J" in box 7 (Bottom).
On the "Which year" screen say that this is a 2020 1099-R.