Hi there,
Normally every year I max out a Roth IRA and in 2022 I contributed the limit of $6,000. Also however in 2022 my income rose quite a bit and put me over the $144,000 AGI limit, so effectively I have an excess contribution of $6,000 for 2021.
I saw the couple of ways to handle this, either re-characterization or doing a withdrawal. I wasn't really fond of the former and the latter I'd essentially have to report as income which would be a pretty decent tax.
But I realize since this is a one-off of my income fluctuating, I can carry over this excess and apply it my 2023 Roth IRA contributions. It would be much better to take the $360 hit ($6,000 * 6%) than to report a withdrawal as income, since I will be able to fully max out my Roth IRA in 2023 again.
This all makes sense to me to this point but my question is really for my 2023 return I have to file next year. How is that reported on the tax return & how do I prove that excess contribution is for 2023? The instructions in TurboTax don't make it so clear if that is the route you want to take (paying the tax and carrying it into the next year), while they have some detailed instructions for either re-characterization or withdrawal.
