Get your taxes done using TurboTax

Yes, your 2022 Form 5329 seems correct.

You will have to pay the 6% penalty on your 2021 and 2022 tax returns because you didn't remove the excess until 2023. You will need to amend your 2021 tax return and add Form 5329 to pay the 6%.

On your 2022 tax return (you seem to have entered this correctly since you show the correct Form 5329):

1. Open your return
2. Click “Deductions &Credits” on the top
3. Click "I'll choose what to work on"
4. Scroll down to “Traditional and Roth IRA Contributions” and click “Start”
5. Select “Roth IRA”
6. On the "Do you have any Excess Roth Contributions" answer "Yes"
7. On the "Enter Excess Contributions" screen enter the total excess contribution from 2021.
8. TurboTax will create Form 5329 with the 6% penalty.

Next year on your 2023 tax return you will report the 2023 Form 1099-R with code J (if you are over 59 1/2 it can be code T or Q) for the regular distribution of the 2021 excess:

1. Click "Federal Taxes" on the top and select "Wages & Income"
2. Click "I'll choose what to work on"
3. Scroll down and click "Start" next to "IRA, 401(k), Pension Plan (1099-R)" 
4. Enter all your 2023 Form 1099-Rs
5. Click "Continue" on the "Review your 1099-R info" screen
6. Answer all the questions and make sure you enter the net contributions prior to 2023 (this will include the excess for 2021) on the "Enter Prior Year Roth IRA Contributions" screen
7. On the "Do you have any Excess Roth Contributions" answer "Yes"
8. On the "Enter Excess Contributions" screen enter the total excess contribution from 2021.

Entering the 2023 Form 1099-R with code J  on your 2023 tax return will enter the $6,000 distribution on From 5329 line 20. This will remove the excess from your 2023 tax return and you will not have to pay the 6% penalty.

Please be aware, if you remove an excess contribution after the due date then you will have to request a regular distribution (without earnings or losses) in the amount of the excess contribution.