I have a somewhat similar situation to Kotkin007 but with some key differences and am unsure of how to handle this. In 2018, I overcontributed to a Roth IRA. My MAGI was unusually high that year due to capital gains. I did not realize this overcontribution until filing my 2018 taxes in 2019, so I withdrew the entire excess contribution and applicable earnings in 2019 before the 2018 tax deadline. However, I failed to include the taxable earnings ($455) in my 2018 return. This year, I got my 2019 1099-R with the $455 in earnings showing as taxable in 2018.
So I went to my 2018 filing and did the amendment, and I found myself caught in that cycle where my MAGI was increased thanks to the taxable earnings, thus resulting in more excess contribution ($170 excess to be exact). I understand that I'm stuck paying the 6% penalty on that for the 2018 tax year (so $10). But how do I deal with the $170 excess now to avoid paying the 6% penalty again for tax years 2019 and beyond? The key difference here is for tax years 2019 and 2020, I will be well within the Roth IRA contribution cutoff, so I am able to contribute the full $6,000. I have already contributed $6,000 for 2019 to my Roth IRA. If I withdraw the $170 and applicable earnings now before the July 15 deadline for 2019 filings, will I be set and all good for future years? What year are those applicable earnings now taxable in - 2018 or 2019? If it's 2018, then that means I'd be stuck in another excess contribution cycle unless I pull out enough to account for the additional excess generated. Or do the applicable earnings apply to 2019, in which case my MAGI has enough wiggle room to not go over the contribution cutoff?
Sorry if this is a confusing explanation. I would really, truly appreciate any help with this! I've been wracking my brain over this and it's hard to find resources for such a specific situation.
