For tax year 2019, I contributed $3,128 to my Roth IRA. However, my income was above the threshold allowed to contribute, and so all of it was considered "excess." I paid a 6% penalty.
For tax year 2020, I contributed $2,000 to my Roth IRA, and my income is back below the threshold, which means I can contribute up to $6,000 total.
In TurboTax, under "Deductions and Credits," I entered $2,000 as my contributions for 2020. I did not convert anything to a traditional IRA, and I did not make any withdrawals.
I entered $3,128 as my "Excess Roth IRA Contributions for Prior Years."
Then it asks, "How Much Excess to 2020? Indicate how much of remaining excess contribution of $3,128 you want to credit toward 2020 Roth IRA contributions."
For "Excess to Credit to 2020 Roth IRA Contributions," I entered the full amount, $3,128, since adding that to my $2,000 is a total of $5,128, which is still under the yearly limit of $6,000.
When I go to review and submit, my completecheck™ to-do list says, "Answers to review. Ensures your final number is right." I click "Review," and it says, "IRA Contributions Worksheet: Taxpayer's excess Roth IRA contribution credit should not be more than zero." The number currently typed into the box is $3,128. Should I change it to zero? But then I wouldn't be rolling over my excess from 2019 into 2020.
I already spoke to an IRS representative, and they said I was eligible to roll it over. Is this a mistake in the TurboTax software? Can I leave everything as is? I just don't want to continue having to pay a 6% penalty every year. Please help!
