I have a similar excess contribution situation and would like clarity before I submit my 2023 tax return (I filed for an extension). I withdrew $8,000 to fix an excess contribution on 3/26/2024 after realizing I over contributed to my SEP IRA for 2023. I have seen DanaB27 consistently state that:
If you withdrew a 2023 excess IRA contribution plus earnings in 2024 before the due date, then you will get a 2024 Form 1099-R in 2025 and it should be included on your 2023 tax return and you have two options:
- You can wait until you receive the 2024 Form 1099-R in 2025 and amend your 2023 return or
- You can report it now in your 2023 return and ignore the 1099-R when it comes unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding. Then you must enter the 2024 Form 1099-R into the 2024 tax return since the withholding is reported in the year that the tax was withheld.
Vanguard did withhold 10% on the earnings for Federal and State so...is the best course of action to not report anything now for 2023 and wait for the 1099-R in 2025 to amend the 2023 tax return and correctly report the withholdings in 2024? I was planning to report the excess earnings on the 2023 tax return by adding a manual 1099 entry and include excess earnings and the tax withholdings, but now I don't know if that is best course of action since it looks like those federal and state withholdings will need to be reported on my 2024 tax return.
