DarrL wrote: Mon Sep 08, 2025 1:01 am
Alan S. wrote: Sun Sep 07, 2025 9:57 pm
Q 2 – No dummy form necessary. You can wait for the return of excess 1099R in January. It will be coded 8J because the $30 of gain will be taxable in 2025, the year IN which you made the contribution. However, you should include an explanatory statement with your 2024 return
Thank you Alan. So it sounds like the primary difference between my situation and what’s described in viewtopic.php?t=450644 is that my actual transaction that contributed to Roth IRA happened in year 2025, not in year 2024. So if I understand you right, that means once I receive in 2026 the 1099-R. It will be code 8J instead of PJ. So even if I don’t include this 1099-R in my 2024 return, next year I don’t need to amend my 2024 return either, just enter it as I receive it in my 2025 return with code 8J. However if my 1099-R is with code PJ (which isn’t the case as you said), then I would have to amend my 2024 return if I didn’t already include it. Is this understanding correct?
I know I made a mess when contributing for previous year and then request return of excess. But this is really subtle, do you have some link to share how I would know that my form will be of code 8J or code PJ? Does IRS attribute the earning to be the year when contribution transaction is made (2025), or the year contribution of the transaction is for (2024)?
Thank you!
The code should be 8J. The 8 or P only denotes the year in which any gains included with the removal are taxable, and any gains are always taxable IN the year the excess contribution was made (2025 in your case), not FOR the contribution year of 2024.
The following is copied from IRS Pub 590A:
How to treat withdrawn interest or other income. Youmust include in your gross income the interest or other in
come that was earned on the excess contribution. Report
it on your return for the year in which the excess contribu
tion was made. Your withdrawal of interest or other income
may be subject to an additional 10% tax on early distribu
tions discussed in Pub. 590-B.
Beginning on or after December 29, 2022, the 10% ad
ditional tax will not apply to your withdrawal of interest or
other income, if withdrawn on or before the due date (in
cluding extensions) of the income tax return. See Pub.
590-B for more information.
Form 1099-R. You will receive Form 1099-R indicating
the amount of the withdrawal. If the excess contribution
was made in a previous tax year, the form will indicate the
year in which the earnings are taxable.
Note that you do not owe the 10% penalty on the gains you receive, just ordinary income tax in 2025.
The 1099R coding is almost always correct, but if your 1099R shows code PJ instead of 8J, you should request that they correct it so the IRS won’t expect you to amend your 2024 to include the gain on that return.
Again, for the 2024 return, all you need is an explanatory statement, no additional forms or income reporting. Hopefully, the tax program you use will support such statements, but some cheap programs do not.
