Hello. I don't have much financial literacy so please excuse me if I make mistakes. I just found out that the annual IRA limit is for all IRA accounts combined and not each separately. It's now February 2025; I haven't filed 2024 taxes yet. How do I go about in correcting the excess contributions in 2022, 2023, and 2024 and how do I report this in TurboTax?
A little backstory: I made contributions 2x a month to both Roth and Traditional IRA accounts. I know when determining excess IRA contributions, the "time of contribution" is important as the last contribution made within a given year is generally considered the "excess contribution" if the total contributions exceed the annual limit. So I've tracked the contribution that pushed me over the limit for 2022's Roth and Traditional IRAs and it was on 9/1/22 until the end of the year, totaling $984.57 for Roth and $2,000 for Traditional. For 2023, the excess contribution was made since 9/15/23 till end of the year and the excess contributions to Roth IRA was $1,067.71 and Traditional was $1,750. For 2024, the excess contribution was made since 9/3/24 till end of the year for Roth with excess contributions of $1,539.72 and Traditional was $1,750 (since 9/15/24-12/31/24).
I have not withdrawn any excess contributions yet as I am doing a lot of research and still confused by the whole process. I read online that I need to withdraw the excess and also its earnings, but just for 2024 contributions. The earnings can be calculated by using the IRS formula NIA = Excess contribution x [(adjusted closing balance - adjusted opening balance) / adjusted opening balance]. But in order for me to do the equation, I need the IRA balance the day before the excess contributions were made to find the adjusted opening balance. At the moment, I do not have the IRA balances for the day before the excess contribution was made, as I am waiting to hear back from my IRA provider for both accounts. After knowing the NIA, I can then withdraw the earnings along with the excess contributions.
So after withdrawing, I have to amend 2022 and 2023 TurboTax by reporting the excess contributions. How do I do that? Would amending come before or after filing 2024 tax return?
Thanks for taking the time to read through my problem and for any help/advice given!
