Where in ProSeries to enter earnings on excess contributions

Forum|Forum|5 years ago
February 17, 2021
22 replies
56 views

I have a client who has excess Roth contributions due to earning over the limit in 2020. The client has requested the contributions and earnings be withdrawn from the account, which is now being completed. The client will receive a 2021 1099-R in early 2022, indicating the withdrawal of excess of contributions and earnings, which are taxable in tax-year 2020. No issues so far. The question is when completing the 2020 return in ProSeries, where do I enter the earnings on excess contributions? The client won't have a 1099-R in time to file for TY2020, so I don't think I should create a fictitious 1099-R. Where do I enter the taxable earnings, also ensuring payment of the 10% early-withdrawal excise on those earnings? Thank you.

ProSeries Professional

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qbteachmt

Level 15

Start here:

https://www.irs.gov/publications/p590a

Don't yell at us; we're volunteers

Z

ZazzyAuthor

Level 2

Your answer, which I will presume was well intentioned, was not particularly helpful. I am thoroughly familiar with both Pub 590A and 590B. I am well aware of the requirements to present it on the current year's taxes, since that is when the excess contributions were made. What I need to know is from the standpoint of the ProSeries program, how to present the earnings on the excess contributions (which are really disallowed contributions due to income cap). Since the excess contribution and earnings thereon weren't removed until February 2021, the brokerage will issue a 2021 1099-R, which will be sent in early 2022. This 1099-R will indicate a Distribution Code in Block 7 of "P", which will indicate a return of excess contributions and earnings taxable in 2020. All well and good. The problem is when filing the client's 2020 return, I need to know where to enter this information and income. I don't think I should create a fictitious 1099-R, since the IRS won't have received the corresponding Copy A until early 2022 when it is filed with them. If I just enter as miscellaneous income, that won't generate the 10% excise penalty. What I need to know is where to enter the earnings on the excess contributions for 2020, when the client won't have a 1099-R until 2022. Thank you for trying.

Chessie

Level 4

Good question as I am trying to work through the same issue. I'm not finding a spot in Proseries Professional to enter the earnings on excess ROTH contribution other than just inputting on Schedule B which won't trigger the appropriate 10% penalty on early withdrawal.

And yes, I'm also familiar with Pub 590-A and 590-B

qbteachmt

Level 15

Your Help article is here:

https://proconnect.intuit.com/community/individual/help/proseries-form-1099-r-faq-s/00/4853

This is not Sched B. This is 1099-R.

The excess contribution is reported for the Year it was contributed for. The earnings are taxable in the year removed.

Don't yell at us; we're volunteers

Chessie

Level 4

Thank you.

And is "earnings" defined as interest, dividend & capital gain?

Or does earnings include the net gain/loss in market valuation?

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