Yes, the earnings from the withdrawals of excess contribution plus earnings need to be reported in the year you made the excess contribution. If you didn't report the earnings when you filed your original 2023 return then you will have to amend your 2023 return to add the 2024 Form 1099-R with code PJ to report the gains from box 2a. Please see How do I amend my federal tax return for a prior year?
- Login to your TurboTax Account
- Click on the "Search" on the top right and type “1099-R”
- Click on “Jump to 1099-R”
- Enter your 2024 Form 1099-R information
- On the "Which year on Form 1099-R" screen say that this is a 2025 Form 1099-R.
- Click "Continue" after all 1099-R are entered and answer all the questions.
- Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return".
Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2022" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2023.
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