Where to enter income related to excess contributions in a ROTH

Forum|Forum|3 years ago
August 10, 2022
1 reply
15 views

In 2021, a client made a contribution to a ROTH IRA when he did not qualify to make the contribution.

Return is on extension. The client had the excess contributions removed from the account, along with the income generated by the contributions.

Per my research, the income is supposed to be picked up in the year the contribution was made (not when the income was distributed). Therefore, I believe it needs to be picked up on the 2021 tax return.

However, I am not sure where to enter the income. My feeling is that it should just go as "Other Income" not subject to SE tax.

Anyone deal with this before?

Also... does anyone who has dealt with this know... if the clearing house going to issue a 1099-R for this, and is it going to show up next year?

Thanks!

Lacerte Tax

This topic has been closed for replies.

Best answer by sjrcpa

Enter as IRA income. Yes there will be a 2022 1099-R.

sjrcpaAnswer

Level 15

Enter as IRA income. Yes there will be a 2022 1099-R.

The more I know the more I don’t know.

A

AnotherTaxGuyAuthor

Level 3

So this is my concern.

How is this reconciled on the tax return? My research indicates to include it on the 2021 tax return, but the 1099 is going to show 2022.

Have you had this situation, and if so, how have you entered it?

sjrcpa

Level 15

The 2022 1099-R will most likely have a code saying taxable in 2021.

The more I know the more I don’t know.

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