As I was completing my tax return, Turbo tax noted I had an excess Roth IRA contribution because of the MAGI limit. I had contributed $8000 in 2024 (for tax year 2024), and based on my MAGI, $1700 was an excess. So I withdrew the excess from Vanguard--they computed the earnings at $365, for a total of $2,065 withdrawal. I entered a 1099-R based on instructions I found here, and it correctly added the $365 to income in 2024. I did have to manually enter it was a corrective withdrawal before the due date, because TT was calculating a penalty, even though I had answered those questions indicating it would be done. The problem I have now is that with the additional $365 income, TT is now showing I still have an excess contribution of $200 because my MAGI is higher after the income from the corrective withdrawal. If I withdraw more and there is earnings on that, this could be an endless circle, as the MAGI will change again. How is this supposed to work? Thanks.
