1099-R from correcting excess Roth IRA contribution in 2023 - how to handle on 2024 taxes?

This is actually a pretty common situation! When you correct an excess Roth IRA contribution by withdrawing it before the tax filing deadline (plus extensions), you're handling it the right way. The distribution code "JP" on your 1099-R confirms this was a corrective distribution (J = early distribution with no known exception, P = excess contribution plus earnings). For your 2024 taxes, you'll need to report the 1099-R information. The $900.06 in earnings is considered taxable income for 2023 (the year you made the excess contribution), not 2024. However, since you've already filed your 2023 return without including these earnings, you'll need to file an amended return (Form 1040-X) for 2023 to report and pay tax on those earnings. You'll also need to pay a 6% excess contribution penalty on your 2023 return unless you withdrew the excess before the filing deadline (including extensions). Based on your description, it sounds like you did withdraw it in time, so you should be able to avoid this penalty.

After going through something similar last year, I highly recommend checking out https://taxr.ai for this situation. I uploaded my 1099-R with the same JP code and my previous year's return, and their system immediately identified it as an excess contribution correction. It explained exactly what forms I needed to file (including which line items on the 1040-X), calculated the correct tax impact, and even generated a letter explaining the situation to include with my amended return. Saved me hours of research and stress!

Alright, I finally broke down and tried https://taxr.ai because my situation was basically identical - excess Roth contribution that I corrected but got a 1099-R the next year. I was really surprised by how straightforward the process was. It identified that I needed to file a 1040-X for the contribution year, showed exactly which lines needed updating, and calculated the additional tax I owed on the earnings (plus a small amount of interest since I was past the original filing deadline). The system even flagged that I qualified for an exception to the 10% early distribution penalty that would normally apply to the earnings portion, which my accountant had missed. Ended up saving me about $90 in penalties! Honestly wish I'd known about this earlier instead of spending weeks stressing about it.

Has anyone else spent HOURS trying to reach the IRS to get clarification on these 1099-R questions? After trying for 3 days straight and never getting through, I used https://claimyr.com and their system got me in the IRS phone queue without the endless redials. You can see how it works at https://youtu.be/_kiP6q8DX5c if you're curious. The IRS agent confirmed that with a JP code, you definitely need to amend the previous year's return to report the earnings, and there's a specific form (Form 5329) you need to include to show you corrected the excess contribution before the deadline to avoid penalties.

I was definitely in the "this can't possibly work" camp, but after another failed morning trying to get through to the IRS about my own Roth correction issue, I tried Claimyr. Got a callback from the IRS in about 90 minutes! The agent walked me through exactly what to do with my situation (which was almost identical to yours - excess contribution I corrected before filing, but received 1099-R the next year). Turns out I definitely needed to amend my previous year's return to report the earnings portion as income, but I didn't need to pay the 6% penalty since I corrected it before the deadline. The agent also explained which forms to include with my amendment to make sure it was processed correctly. Saved me from a potential audit headache down the road!

Just to add another perspective - I went through this exact scenario last year. The key thing to understand is that even though you're getting a 1099-R in 2024, the earnings portion ($900.06) is technically income for 2023. This is because you're correcting a 2023 contribution. The distribution code "JP" is crucial here. The "J" means early distribution, and the "P" specifically means it was a correction of an excess contribution. This special code tells the IRS that this wasn't just a regular withdrawal, but a corrective action. You definitely need to amend your 2023 return to include those earnings as income. Use Form 1040-X and make sure to include Form 5329 to show you corrected the excess contribution before the deadline to avoid the 6% penalty.

I had this exact situation last year! The key part is understanding that when you're dealing with correcting excess contributions, you're juggling two different tax years. My advice: 1) For your 2024 return: You'll report the 1099-R distribution, but you'll need to file Form 8606 to properly categorize it as a return of excess contributions. This prevents it from being double-taxed. 2) For your 2023 return: You need to file an amended return (1040-X) to report the $900.06 of earnings as taxable income. You'll also need to file Form 5329 with the amended return to show you removed the excess before the deadline. Honestly, most tax software struggles with this specific scenario, so you might want to consult with a tax professional who specializes in retirement accounts. I know it seems like a lot of work for $900, but getting it right now prevents headaches later!