Deductions & credits

Thank you I reviewed your token. You do not have any taxable compensation to make Roth IRA contributions. Retirement income, interest, and dividends are not Compensation for Purposes of an IRA.

You will need to remove the excess contribution plus earnings by the due date to avoid paying the 6% penalty. Please request the return of excess contribution plus earnings with your financial institution.

If you withdraw the excess contribution plus earnings by the due date then you can delete the Roth IRA contribution in the IRA contribution interview:

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Uncheck “Roth IRA” and confirm deletion
    

 If you made an excess contribution in 2025 and withdrew the 2025 excess Roth IRA contribution plus earnings in 2026 before the due date, then you will get a 2026 Form 1099-R in 2027 with codes P and J. This 1099-R will have to be included on your 2025 tax return and you have two options:  

• You can wait until you receive the 2026 Form 1099-R in 2027 and amend your 2025 return or
• You can report it now in your 2025 return and ignore the 1099-R when it comes unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding. Then you must enter the 2026 Form 1099-R into the 2026 tax return since the withholdings are reported in the year that the tax was withheld. The 2026 code P will not add anything to your income in the 2026 tax return but the withholdings will be applied to 2026.

To enter a 2026 Form 1099-R in your 2025 return please follow the steps below:

1. Login to your TurboTax Account 
2. Click on the "Search" on the top right and type “1099-R” 
3. Click on “Jump to 1099-R”
4. Answer "Yes" to "Did you get a 1099-R in 2025?"
5. Select "I'll type it in myself"
6. Box 1 enter total distribution (contribution plus earning)
7. Box 2a enter the earnings
8. Box 7 enter J and P
9. Click "Continue"
10. On "Is the IRA/SEP/SIMPLE box on this 1099-R checked?" screen answer "No, the box is blank"?
11. On the "Which year on Form 1099-R" screen say that this is a 2026 Form 1099-R.
12. Click "Continue" after all 1099-R are entered and answer all the questions.
13. Continue until "Tell us which person may have qualified for a penalty exception" screen and select the edit/pencil symbol.
14.  On the “These situations may lower your tax bill” screen 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 2024" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2025.

@jnjmt