In 2022 I made a $6,000 Roth IRA contribution. In Feb 2023 while preparing my taxes, I discovered that I exceeded the income limit and my allowable contribution amount for 2022 is $0. I have an excess contribution of $6,000 for 2022. As I have a rolled over traditional IRA account from an old 401(k), I did not want to deal with the pro rata rule and decided against doing a recharacterizarion (changing to a non deductible IRA contribution and then converting to a Roth). I decided to have the excess contribution returned to me. I called my brokerage and my excess contribution is being processed. My account balance actually decreased so I am at a loss so there will be no earnings to tax.
I’m at a loss how to handle this in the tax software. When I report the $6,000 contribution, turbo tax tells me I have an excess and there is a Q&A that says I can remove the excess, but there is no screen / forms to go through to actually report the removal of the excess. And TurboTax is trying to charge me 6% on the contribution.
From what I can gather, I need to go in and delete any mention to making a Roth contribution- in other words, instead of saying I made an excess Roth contribution and removed the excess Roth contribution, I make no mention of it at all. Is that correct?
In reading some other threads, it looks like some people make a bogus 1099 to report the return of the funds. Do you still need to do that even if it’s at a loss? What would that look like for a loss? I don’t have the exact numbers yet- I could probably estimate or call the brokerage, but it won’t get reported until next year. Since there is no tax impact I wonder if it needs to be reported at all.
@dmertz
@DianeW777
