Be sure to complete Form 8606 to report nondeductible contributions. Similar to requesting a withdrawal of an excess IRA contribution, you should contact your bank or investment firm to request the recharacterization. Remember, it asks if the Excess has been withdrawn and you say yes if you intend to withdraw it by April 15th.
You tell TurboTax that the excess has been removed so a penalty is not applied and the excess does not carry forward. You would enter $7500 as the total amount of your contribution. As you proceed with the entry, Turbo Tax will indicate that you have an excess contribution of $1500 and will ask you if you plan on withdrawing this before the due date of your return.(April 15)
Since you have already withdrawn the excess contribution, you will say "yes".The penalty will not be applied based on this answer..
If, for some reason, you want to change and not withdraw the Excess Contribution. These instructions will take you back to that area and click edit then walk through the interview questions to make the changes.
To enter or edit your Roth IRA contribution:
- On the left side of your screen, click Federal.
- At the top of your screen choose Deductions and Credits.
- Scroll down to Retirement and Investments.
- Click Start on Traditional and Roth IRA Contributions.
edited 2/1/21 | 2:13 pst
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