Publication 970, Tax Benefits for Education page 44 shows your options. Since you are taking the interest earned before June 1, you will not have excise tax on that amount. If you reduce your 2022 contributions by the amount of overage, you will eliminate all overage and penalty. You only pay tax on the interest earned.
- TY 2022 entry- You will receive the 1099-Q in 2023 for TY 2022 with code 3 on the 1099-Q for excess contributions plus earnings taxable in 2021. No amend is necessary due to the coding.
- TY 2021 entry- If you want to enter it this year, you would enter a fake 1099-Q, code 2, to show 2021 excess earnings and basis.
Since I like to keep all forms matching and straight forward, I would not enter the excess this year without a form. The form will come next year and match IRS records and will be entered on 1099-Q. It goes to your sch 1, line 8z.
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