Hi
I had been making contribution to Roth IRA while living abroad and taking Foreign Income Exclusion. I realized I shouldn’t have done that after a couple of years.
I filed an excessive contribution removal form with my custodian and took the money out of Roth IRA. I used form[tk] to pay the penalty to IRS. I did it in June after filing my tax return.
This year I received a 1099-R and upon entering it into Turbo tax I was asked to pay tax on the amount I removed.
Box 7 has P. I look up what P is and the mighty Internet gave me this:
Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2020.
From my interpretation, it did recognize the amount is an excess contribution, and it’s considering taxable when I remove it.
I know Roth IRA is taxable when one withdraws money from it. In my case, I was correcting an amount that shouldn't have been there in the first place. Why is this amount taxable?
