Thanks @DanaB27 . Funny thing is, my 2022 return does not have a 5329 nor show a penalty... Maybe best if I backtrack and start from the beginning to ensure clarity...
I filed my 2022 return in February 2023. On this return, on the Traditional and Roth IRA Contributions worksheet, in Deductions and Credits, I reported $4920 of contributions to a Roth IRA. In this worksheet, it asked me if any of my contributions were in excess, to which I said "no" and moved on. TurboTax never warned me that based on my MAGI, that I may be penalized for an excess, and a 5329 did not generate with my 2022 return.
I then read not long thereafter, around March 2023, that I was only eligible to contribute a reduced amount in 2022 based on my MAGI. I believe I still could've contributed some amount, but to be safe I had my financial advisor remove all of my 2022 contributions plus earnings (in this case, it was actually losses). At the same time, I had them remove my 2023 contributions to date (which was $1230) plus earnings ($14) and then stopped contributions.
Now in 2024, I received my 1099-R to reflect the 2023 early withdrawals. I had two funds with investments, and each generated two 1099-Rs as follows:
1- (1) 1999.66 (2a) 0.00 (7) JP (no other applicable boxes or all unchecked/0s) - this is 1/2 of my 2022 contribution returned to me, minus the losses
2- (1) 622.29 (2a) 7.29 (7) J8 - this is 1/2 of my 2023 contributions returned + earnings
3 - (1) 1999.67 (2a) 0.00 (7) JP - the other 1/2 of my 2022 contributions, minus the losses
4 - (1) 622.30 (2a) 622.30 (7) J8 - the other 1/2 of my 2023 contributions + earnings
I entered all of these on my 2023 return. And here's where it started getting tricky... When I was ready to do the Federal Review, a check popped up that I needed to enter $4200 on a line on form 5329. This prompted me to go back to the Roth Contributions worksheet. Here, it suggested that I had an excess of $4450 from 2022 (generated to line 18 of 5329), and then on line 29 it entered that $4200 "credit" from 2023, so then I was being penalized 6% on the difference - $250. What I don't understand is where that $4450 of "excess" was generated from, and then why it told me to enter the $4200 either. Since I withdrew all my contributions from 2022 and 2023 before the 2022 tax filing deadline, I should not have any excess to be penalized... A TurboTax employee suggested I just "delete" the $4450 to "fix" it, but that doesn't make me very comfortable... It came from somewhere and I'd like to know where, if possible.
I know that was a lot... Thanks so much for your continued help.
