Applying the 2022 excess contribution to next year means you leave it in the Roth IRA (don't involve your financial institute), pay the penalty for 2022, and then apply it to 2023 with an entry on your 2023 tax return.
Yes, if you contributed $2,000 for 2023 you would enter the $2,000 Roth contribution and then apply the $400 excess in the follow-up questions. Therefore, you used $2, 400 of the general $6,500 contribution limit for 2023. Please make sure you have enough taxable compensation in 2023 to make the $2,400 contribution for 2023.
Please see the steps below for your 2023 tax return.
- Click on "Search" on the top right and type “IRA contributions”
- Click on “Jump to IRA contributions"
- Select “Roth IRA” and enter your $2,000 contribution
- On the "Do you have any Excess Roth Contributions" answer "Yes"
- On the "Enter Excess Contributions" screen enter the total excess contribution from 2022 of $400 (if it wasn't carried over).
- On the "How Much Excess to 2023?" screen enter how much you want to apply to 2023 ($400).
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