You would report the $25 withdrawal and associated $3 in income on your 2023 tax return. You would do this by entering a substitute Form 1099-R as follows:
- Go to the personal income section of TurboTax
- Find the Retirement Plans and Social Security menu option
- Start or Update IRA, 401(k), Pension Plan Withdrawals (1099-R)
- Choose Add Another 1099-R
- Choose I'll type it in myself
- On the screen that says Tell Us Which 1099-R You Have choose I need to prepare a Substitute 1099-R
- Enter the distribution amount in box 1 of the substitute 1099-R
- Enter the earnings in box 2(a)
- Enter code "P" in box 7
- When asked about the year on the form 1099-R, say it is for the year following the year you are working on
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