My wife and I over-contributed to our Roth IRAs in 2022. I requested and had the excess contribution and earnings/losses removed in February 2023 prior to submitting our 2022 tax returns. I only claimed the allowed Roth IRA contribution amount on our 2022 return. We were in that in-between window of we were allowed some contributions to Roth IRA but not the entire amount.
I understand that PJ code in 2023 1099-R indicates the earnings (box 2a) need to be included on the 2022 amended tax form. I started on the amended tax return for 2022, but I'm in a spiral of sorts. Once I input the $62.75 (box 2a on 1099-R) on amended return it says the amount I could contribute to our Roth IRAs is even less than what it was when I submitted 2022 tax return. So now do I have to remove the $40 excess contribution from each Roth IRA? Won't that just result in more earnings for 2022 which will then result in yet another reduction in our allowed Roth IRA contribution amount?
Please help. Hopefully I'm missing something obvious.
Thanks.
