Mischaracterized Non-Deductible IRA/Excess Roth Contribution

[jbo1614]

Hi - I was scrutinizing my completed (but not yet filed) 2021 return and realized that I have been carrying over an "excess contribution" to a Roth IRA since my 2018 return and paying a 6% penalty each year since then (as shown in Part IV on Form 5329). In reality, in 2018 I made a non-deductible contribution (due to income above the IRS limit) to an IRA and quickly back-doored it to a Roth. I must have answered a question incorrectly in TurboTax that resulted in this appearing as an "excess contribution" to my Roth.  This "excess contribution" has shown up in Part IV of Form 5329 since 2018.  In my 2018 return I also correctly entered the Non-Deductible contribution and completed Form  8606. What do I need to do to correct this? Do I need to amend 2018 - 2020 returns to keep this from appearing each year?

[DanaB27]

Yes, you will have to amend your previous returns to get a refund on the penalty paid if you didn't have an excess contribution left in the account. You have three years from the date you filed your return or two years after you paid the tax due (whichever is later) to file an amendment. Please see How to amend (change or correct) a return you've already filed

For 2021, 2020, and 2019 please follow these steps to remove the excess contribution:

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. Continue until the "Enter Excess Contributions" screen and delete the total excess contribution that was carried over.

For 2018 delete the Roth contribution, since it seems this is what triggered the excess contribution in 2018.