1099-R Roth IRA excess removal - no taxable income

[AL107]

We have removed our 2021 Roth IRA excess contribution in 2022 before dead line so there is no penalty, but with a loss - no earnings, no income to report. We have just received our 2022 1099-R with PJ proving the above and with 0 taxable amount. Do we need to enter anything on our 2022 tax return, or we can simply ignore it?

[MichaelG81]

Yes, still report the 1099-R even if it shows 0 taxable. Do not ignore as this can have an affect on other portions of tax return. If showing 0 taxable amount, it may not even affect the outcome of your taxes, but still needs to be reported. The IRS is looking for forms reported to taxpayers on their returns.

@AL107

Edited 02/07/2023 | 01:53 PM PST

The form should have a tax year on it, if it says 2022, you report this year. If it says 2021, (which may not be the case since it was withdrawn in 2022) you would report in 2021 taxes.

[dmertz]

If there is no tax withholding shown on the code JP 2022 Form 1099-R, 2022 TurboTax will tell you that the return of contribution needed to be reflected on your 2021 tax return and will otherwise ignore it.

[AL107]

Thanks @MichaelG81 .  Do you know which tax return it should be applied to - 2021 or 2022? I realized that I have an excess only after filing my 2021 return, but pulled it out before the deadline. While reading many posts on this forum I noticed that there are mainly two divided suggestions on how to handle excess contribution with no taxable income (with a loss) and they do contradict each other:

1. if there is no additional income - there is nothing to amend in 2021

2. since the excess is for 2021, 1099-R should be applied for 2021 through amendment (?), but yet I have in fact no additional income.

Finally, if IRS got my 2022 1099-R with no taxable income and with PJ codes, it seems they should be knowing already there is/was nothing to report, should not they? So, I’m confused between these two options above. This type of amendment creates lots of hustle while de-facto nothing is changing: inability to e-file the amendment (that comes from IRS publication for Roth IRA removals), paying additional fees to TT.  I would really appreciate if you could give some more clarity .

Thanks again for your help!