Tax withholding from a 1099-R excess distribution (code P)
I have a client who made an excess contribution to a Roth IRA and so they withdrew it before the tax deadline and got a 1099-R with distribution code P. My understanding is I need to report the earnings on the excess contribution in the tax year they made the contribution (the previous year). And there's a special checkbox on the "Other Information" page in ProConnect ("2024 Form 1099-R with distribution code 'P' or 'R'").
That's all fine, but they had box 4 tax withholding on the 1099-R for the distribution of the excess. And my understanding is that tax withholding has to be reported on the next year tax return rather than the previous one. And the way that's supposed to work is the tax software should allow the withholding to be reported, but not the taxable income when you enter that 1099-R with code P and this time don't check the "2025 Form 1099-R with distribution code 'P' or 'R'" checkbox.
But ProConnect seems to also be ignoring the tax withholding when I don't check that box. I think this may be a bug in the software, unless I'm not understanding something. Is there any way I can force ProConnect to allow that to report that tax withholding on that next year tax return? I can't just put in zeros as the distribution amount because it reports that as a critical error.
