Form 1099-R Code P with withholding
2022 Form 1099-R ($1400 gross distribution) with distribution code P (P means it is reported as income in 2021, which we did).
Normally I would ignore this 2022 1099-R since we reported it as taxable income in 2021.
However, now that we see the 2022 Form 1099-R, it has withholding!
Should we show the $1400 as non-taxable on the 2022 return with the withholding?
Or should the withholding be applied to 2021 (meaning we would need to amend the 2021 return)?
I have no clue why they withheld!!!! I don’t believe I have ever seen that before!
Thanks in advance!
Permalink Submitted by Alan - IRA critic on Tue, 2023-09-26 20:18
You should specificly decline IRA withholding unless you want it. In this case the withholding was applied to 2022 as it shows on a 2022 1099R because the return of excess was done in 2022, even though the gains on the returned contribution were taxable in 2021. To get credit for the withholding, claim it on your 2022 return even though there is no need to otherwise report the corrective distribution on your 2022 return, as that was done on your 2021 return.