I am attempting to process an excess Roth IRA contribution, but I am finding the process challenging and convoluted. It also seems there are errors in TurboTax, so may be entering something incorrectly.
I received a Form 1099-R from my Roth IRA holder. It has Box 7 given as "J". I followed a process that both the IRS and my Roth IRA holder state will result in no penalties to me.
When I go through the process, TurboTax asks me to enter Prior Year Roth IRA Contributions. It doesn't state whether this includes interest income on the account. It doesn't specify how this should be calculated. I'll add that there is no practical way that I can go back for each of the past 21 tax years to add this up. If I'm expected to look this up with my Roth IRA holder, it's not clear what date I should look to, e.g. should I attempt to find the balance as of 1/1/20 or 12/31/20 or?
I'll also note that my tax refund goes down by $80 for a $310 excess contribution, when there is no clear reason that it should go down at all. The amount of my 2020 Roth IRA contributions shouldn't affect my taxable income for 2020, and I should not be receiving any penalty for the excess contribution, which I returned in 2020 (and the IRS says that I should not be penalized). So why does my tax refund go down when I process an excess Roth IRA contribution.
