Next year on your 2021 tax return you will go to the IRA contribution section and TurboTax will ask if you had any prior excess contribution and then give you the option to apply it as a 2021 contribution. Please keep in mind this will only work if you can contribute to a Roth IRA in 2021.
Next year on your 2021 tax return:
- Open your 2021 tax return
- Click on "Search" on the top right and type “IRA contributions”
- Click on “Jump to IRA contributions"
- Select “Roth IRA”
- Answer "Yes" that you made a contribution (even if you did not)
- Continue until the "Do you have excess contributions" screen and answer "yes"
- Enter the excess contribution amount
- O the next screen enter the amount you want apply as a 2021 contribution.
If you choose this option, then on your 2020 tax return you will still have to pay the 6% penalty for the excess contribution. TurboTax will calculate the the penalty on Form 5329 when you enter your contribution and trigger the waring that you have an excess.
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