UPDATE: I tested it again, and VolvoGirl and DawnC are correct. A ("warning") message will appear stating that there is an excess contribution (in the example of a $6500 IRA contribution with $5000 earned income). Additionally a Form 5329 is generated as fanfare mentioned.
Note the initial test did not detect any errors because besides $5000 income from W-2, I forgot I also entered in $3000 for a 1099-MISC. This brought the actual total earned income to $8000-ish (minus self employment tax), which is more than the IRA contribution amount. Hence no error. I was also curious on 1099-MISC income and eligibility for IRA contributions. Apparently some 1099-MISC are eligible and some aren't, but that is a discussion for another time.
Thank you all that responded!
