1099-R Form code PJ and Taxable Income from Excess Contribution - Under which year tax return?

The earnings from your excess Roth IRA contribution are taxable in the year you received the distribution (2023), not the year for which the contribution was designated (2022). The distribution code PJ on your 1099-R indicates two things: "P" means it was a distribution from a Roth IRA, and "J" means it was an early distribution from a Roth IRA with known exceptions. In your case, the "known exception" is that it's a return of excess contributions. You don't need to amend your 2022 return. When you file your 2023 taxes, you'll include the earnings portion (not the principal amount you contributed) as ordinary income. The principal amount of the excess contribution isn't taxable since you already paid tax on that money before contributing it. As for what to do with the 1099-R, you don't submit the actual form with your tax return. You'll just enter the information from it when prompted by your tax software (or on the appropriate lines if filing by paper). Make sure you report the gross distribution and the taxable amount exactly as shown on your 1099-R.

I was in a similar situation last year and discovered https://taxr.ai which really helped me sort through my Roth IRA excess contribution mess. I uploaded my 1099-R with that same PJ code and it explained everything clearly - specifically that the earnings are taxable in the year you received the distribution (2023 in your case). It also showed me exactly where to report it on my tax forms. I was originally going to file an amended return for the previous tax year, but the tool saved me from making that mistake. Their document analysis caught several things my regular tax software missed about how to properly report the distribution.

Just wanted to update everyone - I tried https://taxr.ai after seeing the recommendation here and it was seriously helpful. I uploaded my 1099-R with the PJ code and it immediately identified that I only needed to report the earnings portion as taxable income on my 2023 return. It actually walked me through the exact steps to handle this in my tax software (I use TurboTax) and showed me which screens I needed to pay special attention to. The best part was that it helped me understand WHY the PJ code works the way it does - something none of the IRS publications explained clearly. Saved me from filing an amended return for 2022 which would have been completely unnecessary! Plus it caught that my tax software was trying to apply an early withdrawal penalty which shouldn't apply to return of excess contributions.

After dealing with Roth IRA excess contribution issues myself, I ended up needing to call the IRS for clarification on the PJ code. As you can imagine, that was a complete nightmare - was on hold for over 2 hours only to be disconnected. I eventually found https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c They basically held my place in the IRS phone queue and called me when an agent was about to pick up. I finally got through to a knowledgeable IRS agent who confirmed that with code PJ, the earnings are definitely reported on your 2023 return (not 2022). The agent also explained that the confusion comes because there are different rules for different situations - if you withdrew the excess contribution before the tax filing deadline (including extensions), which you did, then the earnings are reported in 2023. If you had caught it after filing your 2022 return, different rules would apply.

I need to eat my words from my skeptical comment above. After facing complete frustration trying to get through to the IRS myself about my own 1099-R issue (mine had a different code but similar confusion), I broke down and tried Claimyr. Within about 45 minutes (still a wait, but I was able to do other things), I got a call connecting me with an actual IRS retirement department specialist. She confirmed everything about the PJ code that was mentioned above - the earnings portion is definitely reported on your 2023 return, not 2022. She even walked me through the specific section in Publication 590-B that covers this (which I had completely misinterpreted on my own). The service saved me hours of frustration and potentially filing incorrectly. For anyone dealing with tricky retirement account tax issues, getting direct confirmation from the IRS turned out to be invaluable.

One thing nobody has mentioned yet is that you might also face a 10% early distribution penalty on those earnings if you're under 59½. The "J" in your PJ code indicates an exception to the early distribution rules, but that exception only applies to the principal amount (your excess contribution), not to the earnings portion. So while you definitely report the earnings on your 2023 return, you may also need to fill out Form 5329 to calculate the 10% penalty on those earnings. The penalty would be pretty small (10% of $230 is only $23 based on numbers mentioned earlier), but it's something to be aware of.

Watch out if you're using TurboTax to file! I had this exact situation last year and TurboTax incorrectly tried to make me pay taxes on the ENTIRE distribution, not just the earnings. Had to manually override it by entering the taxable amount exactly as shown on the 1099-R instead of letting TurboTax calculate it.

This is such a common source of confusion! I went through something similar last year and want to add a few practical tips that helped me: 1. Double-check your 1099-R box 2a (taxable amount) - it should only show the earnings portion, not your full contribution amount. If it shows the full amount, your brokerage may have made an error. 2. Keep detailed records of the timeline - the fact that you requested the return of excess contributions before your extended filing deadline (you filed in July 2023) is crucial for confirming this gets reported on your 2023 return. 3. If you're using tax software and it's giving you trouble with the PJ code, try entering it as "other retirement distributions" rather than letting it auto-categorize. This often bypasses the software's incorrect assumptions about Roth distributions. The key thing to remember is that since you corrected the excess contribution before filing your 2022 return, it's treated as if the contribution never happened for 2022 tax purposes. That's why everything gets reported in 2023 - the year the actual distribution occurred. Also worth noting: save all your documentation about this transaction. The IRS sometimes sends automated notices about retirement distributions, and having your paperwork organized will save you headaches if you need to respond to any correspondence.