Since the excess was removed after the due date of the 2023 tax return you daughter should have requested a regular distribution without earnings. The financial institution shouldn't have accepted a return of a 2023 excess contribution plus earnings after the extended due date. Please check with Fidelity about this error.
A regular distribution to fix a excess contribution after the due date will be reported in the year you withdrew the excess, so in your daughter's case on the 2025 tax return.
Since the excess wasn't removed until 2025 you daughter will have to pay the 6% penalty on her 2023 return and also on he 2024 return unless she can apply the excess as a 2024 contribution.
- Click on "Search" on the top right and type “IRA contributions”
- Click on “Jump to IRA contributions"
- Select “Roth IRA”
- On the "Do you have any Excess Roth Contributions" answer "Yes"
- On the "Enter Excess Contributions" screen enter the total excess contribution from 2023 (if it wasn't carried over).
- On the "How Much Excess to 2024?" screen enter how much you want to apply to 2024.
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