I made $7000 excess contributions each to my Roth IRA for tax years 2020, 2021 and 2022 and my spouse's Roth IRA for 2020 and 2021. While doing my 2021 taxes, I discovered my errors in March 2022 and filed an extension for my 2021 taxes to extend the deadline to Oct 15, 2022. I worked with my broker to resolve the excess contributions as follows:
For my Roth IRA,
In May 2022, the broker returned (withdrew) $7000 excess for tax year 2020, returned $5614 (including losses) for tax year 2021 and $6652.10 for tax year 2022.
For my spouse's Roth IRA
In May 2022, the broker returned (withdrew) $7000 excess for tax year 2020, and recharacterized the 2021 excess to the traditional IRA - $11000 including earnings.
What I have done so far
In April 2022, amended 2020 return and paid 6% penalty for both IRA's. for 2020 excess.
In August 2022, filed my 2021 tax return. Paid 6 % penalty again for both IRA's for 2020 excess. Since the 2021 excess was withdrawn for my Roth IRA and recharacterized for my spouse's Roth IRA before the extension deadline of October 15, 2022, I did not show excess for either IRA for 2021. I created a 1099 R and the distribution of $5614 was reported in 2021 tax return.
Please confirm if all that has been done so far is correct.
Now I am doing my 2022 tax return. I am planning to amend my 2020 return again to show that the 2020 excess has been removed from both our IRA's. I received 1099 R's for all of the above distributions in Jan 2023. Here are my questions:
1) After I amend my 2020 return to show the excess has been removed in Form 5329, please confirm that I am done with the 2020 excess for both IRAs for future years.
2) I do not intend to show any excess for tax year 2022, since it was removed in 2022 itself. Please confirm that is correct.
3) Turbotax interview questions ask for all the 1099 R data. Since 2021 distribution and recharacterization was entered in the 2021 return, it need not be shown in the 2022 return. Is that correct?
4)Turbotax Deluxe seems to be adding the 2020 distribution amounts of $14000 to the $6652 withdrawal of the 2022 excess. Why is that - should the distribution/contribution for 2022 return not just include $6652?
5) If it should only include the 2022 excess withdrawal of $6652, should the $14000 distribution of 2020 excess be shown in the amended 2020 return?
I apologize for the LONG question but I am really stressed and at a loss on resolving this correctly. I appreciate your patience in reading the question carefully and providing a complete response to all my questions.
Many thanks in advance
