exceed the ira contribution limit

[kb6354]

I just realized after I filed my return that I over contributed to my IRA accounts, I contributed $7000 in Roth and $4000 in Traditional IRA. How do I go about to make the correction?

[fanfare]

if you took a deduction and don't want to amend,

you must remove $4,000 plus earnings from your Roth.

ask the custodian to do it. there is a form for it.

[kb6354]

I'm thinking about withdraw $4000 from my Roth, but do I still have to file amend after the $4000 withdrew?

[DoninGA]

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@kb6354 wrote:

I'm thinking about withdraw $4000 from my Roth, but do I still have to file amend after the $4000 withdrew?

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No.  Since the withdrawal will be in 2022 you would report that on your 2022 tax return that you will file next year.

[kb6354]

I thought if I withdrew the excess amount before April 18th, I have to file the amend.

[DoninGA]

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@kb6354 wrote:

I thought if I withdrew the excess amount before April 18th, I have to file the amend.

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You are correct.  I misread your problem.

[fanfare]

you have to report the earnings, if any,  on the tax return for the year for which the contribution was made.

you can do it now or later.

I left that out to avoid complication.

To do it now, TurboTax may make it difficult.

the earnings should be a lot less than the IRA deduction.

you have until Oct 15 to do all this if you file form 4868.

[DanaB27]

If you filed your 2021 tax return showing the 6% penalty for the excess contribution then you will have to remove the penalty by entering that you removed the excess contribution of $4,000 on the penalty screen during the IRA contribution interview when you amend your 2021 tax return.

You will get a 2022 Form 1099-R  in 2023 with codes P and J for the withdrawal of excess contribution and earnings. This 1099-R will have to be included in your 2021 tax return. 

To enter the 2022 Form 1099-R in your 2021 amended return please follow the steps below:

1. Click on the "Search" on the top right and type “1099-R” 
2. Click on “Jump to 1099-R”
3. Answer "Yes" to "Did you get a 1099-R in 2021?"
4. Select "I'll type it in myself"
5. Box 1 enter total distribution (contribution plus earning)
6. Box 2a enter the earnings
7. Box 7 enter J and P
8. Click "Continue"
9. On the "Which year on Form 1099-R" screen say that this is a 2022 Form 1099-R.
10. Click "Continue" after all 1099-R are entered and answer all the questions.
11. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Another reason" if you are over 59 1/2 (if you are under 59 1/2 click "Continue")

Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2020" you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2021.

Please make sure that you do not select to withhold taxes when you request to remove the excess contribution and earnings with your bank.

@kb6354