If the conditions for a corrective distribution are met, the original contribution is treated as if it had not been made, but the distribution of income earned by the IRA on the excess contribution is taxable in the year of the contribution. So in your case the income removed, which is reported on your 1099-R must be included on your 2023 tax return. You need to amend your 2023 tax return and report the income. I'm not clear on exactly how you reported your excess contribution for your 2023 return, so I'm not sure what you need to report. If you reported the excess contribution as if you had received a Form 1099-R, you can ignore that part and you only need to enter the amounts that relate to the earnings that are reported on the Form 1099-R. The following are the instructions for how to report the removal of your 2024 excess contribution and earnings:
For a return of an excess Roth IRA contribution (with earnings when applicable) you will use code codes J and P. Code P will indicate a "Return of contribution taxable in 2023". That can be ignored since a follow-up question will tell the program that it is taxable in 2024.
Since you made a "timely correction" you will receive a 2025 Form 1099-R in 2026 with codes P and J. This 1099-R will have to be included on your 2024 tax return and you have two options:
- Wait until you receive the 2025 Form 1099-R in 2026 and amend your 2024 return or
- Report it on your original 2024 return and ignore the 1099-R when it comes.
You can create a Form 1099-R in your 2024 return as follows:
- Make sure you are logged in to your return
- Click on the "Search" on the top right and type “1099-R”
- Click on “Jump to 1099-R”
- Answer "Yes" to "Did you get a 1099-R in 2024?"
- Select "I'll type it in myself"
- Box 1 enter total distribution
- Box 2a enter the earnings (if applicable)
- Box 7 enter J and P
- Click "Continue"
- On "Is the IRA/SEP/SIMPLE box on this 1099-R checked?" screen answer "No, the box is blank"?
- On the "Which year on Form 1099-R" screen say that this is a 2025 Form 1099-R.
- Click "Continue" after all 1099-R are entered and answer all the questions.
- Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return".
You can do the same thing for your 2023 amended return, but adjust the amounts so they only include the income portion, if you reported the corrective distribution on your original 2023 return.
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