@manii wrote:
I know I will have to remove 6000-(the amount I contributed). I assume I will also have to remove the earnings on that amount - how should I calculate that?
And do I have to report this on my taxes? I filed my tax return back in March 2020. But I opened the Roth IRA account and made the contribution for 2019 in April 2020. So I'm not sure if I need to file an amended return or leave everything as is.
The account custodian is required to calculate the earnings on the excess. You only need to remove $5,000 excess if you had a W-2 with $1,000 in box 1. Be sure to tell them that it is a "return of excess contribution" so they will remove the earnings and report it properly and not just as a normal distribution.
Since you already filed then you will have to amend, but not until next year after you receive the 2020 1099-R that reports the return of contributions with a code JP in box 7, next January. That 2020 1099-R code JP must be reported on a 2019 amended tax return but only if box 2a contains an amount of taxable earnings. If no earnings (or a loss) then amending will not be needed since the returned contribution itself is not reportable - only the earnings, if any, are.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
