In 2021, I made an excess contribution to my Roth IRA (I am under 59 1/2):
- Contributed: $6,000
- Maximum allowed: $1780 (due to MAGI between 125k & 140k)
- Excess Contribution: $4220
This month, I withdrew $4,456 from my Roth IRA ($4220 excess + $236 in earnings). I understand that next year I will receive a 2022 1099-R with this income, however, in order to avoid amending my 2021 return, I am attempting to include this in my 2021 return now.
I followed the instructions (create a 1099-R, check boxes P & J, select 2022 for the form year). As a result, the $236 in earnings is added to my 2021 1040, line 4b. However, this now increases my MAGI by $236 as well. TurboTax is now using that new MAGI to indicate that my max Roth IRA contribution is less due to higher income ($1680 versus $1780), and as a result, is calculating an excess contribution tax at 6% on that difference. How can I stop this from happening?
