The tax goes up because the is a 6% penalty for excess IRA contributions that repeat every year until removed. To remove the penalty the excesses plus any earnings must be removed before the Apr 15 filing date.
Only taxable compensation is eligible fro IRA contributions.
(Taxable compensation is generally wages that you worked for - W-2 or net self-employed income minus the deductible part of the SE tax, but can include commissions, certain alimony and separate maintenance, and nontaxable combat pay ).
See IRS Pub 590A "What is compensation" for details:
https://www.irs.gov/publications/p590a#en_US_2020_publink1000230355
**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.**
