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Get your taxes done using TurboTax
Hi, DanaB27,
Thank you so much for your reply. It is very helpful. I confirmed that the withheld tax was actually reported to my 2024 return. I will delete it from my 2023 amended return. My first question was resolved.
For my second question, I just figured out that the 6% penalty is not for the early withdraw but it is for the excess contribution. Here is what I figured out. In 2023, I and my wife both made Roth IRA contribution $7500 for each. Our MAGI was $226407 for 2023. We only allowed Roth contribution of $1200. We withdrawn the excess contributions plus the earnings ($1705) before the due date. I thought we avoided the excess contribution penalty. However, when I submitted my 2023 amended return, since it added up $1705 earnings, our MAGI now became $228112. In this case, we do not allow any Roth IRA contribution. The regular contribution of $1200 now becomes excess contribution and we got penalty on it. Not sure if my analysis is correct. If this is the case, I think it is unfair for us since we followed the correct process to do it. Also, if it is the case, we need to withdraw $1200 immediately otherwise we will get further penalty. Do I still have options to avoid the penalty? Please advice.
Thanks.