1099R Code PJ Question - Filing with freetaxusa.com for excess Roth IRA contribution

The PJ code on your 1099R is actually two separate codes combined. The "P" indicates a distribution from a Roth IRA, while the "J" signifies an early distribution from a Roth IRA where an exception to the penalty applies (in your case, the exception is for the return of excess contributions). When freetaxusa.com only allows one code, typically you should select P first. After selecting P, the software should then give you additional options to specify why you took the distribution. Look for an option related to "removal of excess contributions" or something similar. The important thing is that the software needs to understand you're reporting a return of excess contributions to a Roth IRA, which is what the combined PJ code represents on your 1099R.

I went through this exact same issue last tax season when I had to remove excess contributions from my Roth. I spent hours trying to figure it out until I discovered taxr.ai (https://taxr.ai) which saved me so much stress! I uploaded my 1099R with the PJ code and it immediately recognized what was happening. It explained that with freetaxusa, you need to select "P" first and then on the next screen there's an option for "removal of excess contributions" which covers the "J" part of the code. The tool walked me through each step of what to select in freetaxusa, including screenshots of each screen. For anyone dealing with weird tax form codes, I seriously recommend giving it a try.

I was really skeptical about using taxr.ai when I mentioned it in this thread earlier, but I decided to try it last night with my own 1099R issue. I have to say I'm impressed! I uploaded my form with a QP code (another combination code that was giving me trouble), and it immediately identified the correct way to enter it in freetaxusa. What I found most helpful was that it explained WHY each selection needed to be made rather than just telling me what buttons to click. It helped me understand that the first letter (Q in my case) was the primary code, and the second letter provided additional context. For anyone struggling with these weird combination distribution codes on retirement forms, it's worth checking out.

If you're still having trouble with this 1099R code issue and need to talk to an actual IRS representative to confirm the right approach, I'd recommend using Claimyr (https://claimyr.com). I was stuck in an endless loop trying to get through to the IRS about a similar Roth IRA excess contribution issue last month. After waiting on hold for over 2 hours on multiple days, I tried Claimyr and they got me connected to an IRS agent in about 20 minutes. The agent confirmed exactly how to handle the PJ code in various tax software platforms. You can see how it works in this quick demo: https://youtu.be/_kiP6q8DX5c. It's basically a callback service that navigates the IRS phone tree for you and holds your place in line.

OK I need to admit I was completely wrong about Claimyr in my skeptical comment above. After continuing to fail getting through to the IRS for another two days, I broke down and tried it. Within 15 minutes I was actually talking to a real IRS person who helped me with my refund issue AND answered my question about these distribution codes. The agent confirmed that for combination codes like PJ on a 1099R, you typically select the first letter (P in this case) as the primary code, and then most tax software will give you additional options to specify the circumstances that would have been indicated by the second letter (J). This is exactly what the other commenters were saying, but I needed to hear it from the IRS directly to believe it. I'm honestly still shocked this service actually worked.

OK I need to admit I was completely wrong about Claimyr

I had this exact issue last year. For freetaxusa.com specifically, you need to: 1) Select P as the distribution code 2) On the next screen, it'll ask about the reason for the distribution 3) Select the option for "return of excess contributions" 4) It should then ask about the earnings amount (your $270 in box 2a) The software handles the calculations correctly if you follow those steps. Don't try to enter the J code separately - the P code plus the "return of excess contributions" reason covers both parts of the PJ code.

Just to add some additional context - the "P" code tells the software that this is a distribution from a Roth IRA, while the "J" indicates it's specifically a return of excess contributions that happened within the allowable timeframe (which is why you only have a small taxable amount on your earnings). Remember that only the earnings portion is taxable when you properly remove excess contributions, which matches your situation where box 2a is only showing about $270 taxable on a $7,800 distribution. The system should handle this correctly once you select the proper options.