Yes, if you request the withdrawal of excess contributions plus earnings before the due date then the excess will be resolved and you do not have to pay the 6% penalty.
You will receive a 2025 Form 1099-R with code P and J to report the return of excess contribution made in 2024 withdrawn in 2025. This will have to be reported on your 2024 tax return. If you didn't have any earnings when withdrawing the excess contribution you will follow these steps to enter the 2025 Form 1099-R on your 2024 return:
- Login to your TurboTax Account
- 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 (contribution plus earning)
- Box 2a enter the earnings of $0
- 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.
If you earned income that was paid in cash, then you are still required to report it on your tax return. Please see How do I report cash income from self-employment?
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
