I have been going in circles on TurboTax Online trying to get it to properly treat and calculate my excess 2025 Roth IRA contribution on Form 5329. I have already withdrawn the excess contributions, but Online is not letting me reflect this on my 2025 tax forms without having a 1099-R (which in Box 7 you use Code 8 to indicate return of your excess contribution). I won't ever receive a 2025 1099-R because I withdrew my 2025 excess contribution in Feb 2026. I will get a 2026 1099-R in January 2027, which I should have to do nothing with but file it away. I should be able to file my 2025 taxes and report that I withdrew my 2025 Roth IRA contribution on time and report and pay taxes on the earnings I made on the excess contribution through December 31 and not have to pay a 6% penalty this year. BTW, I believe it is also incorrectly calculating and displaying your excess contribution if you are married, filing jointly. So not only does it access the 6% penalty, but it assesses it on the wrong amount.
I asked 20 questions in the help portal on the right to try to get guidance, but it keeps telling me I must pay the 6% penalty on my excess 2025 Roth IRA contribution NOW, then file a 2025 amended return next year to (hopefully) get the penalty back next year. This is not per IRS rules, and simply incorrect. If you withdraw the Roth IRA excess contribution before the 2025 filing deadline (April 15, 2026) you are not subject to the 6% penalty on your excess 2025 Roth IRA contribution......ever. It does tell me correctly to not enter a manual 2025 1099-R because I will get a 2026 1099-R next year. But there is no way to tell it not to impose the 6% penalty on Form 5329. So, I keep going in circles. CoPilot AI tells me the only way to file a correct TurboTax 2025 tax return is to use Desktop where I can manually correct the forms and worksheets to be correct. This is ridiculous. Online needs to be fixed.
