Retirement tax questions

1. Yes, that is correct.

2. Yes, that is correct.

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. Enter Roth IRA contribution
5. On the "Do you have any Excess Roth Contributions" answer "Yes"
6. On the "Enter Excess Contributions" screen enter the total excess contribution from 2021 ($6,000)

3. Yes, that is correct.

4. Yes, that is correct.

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. Enter the Roth IRA contribution for 2024 ($7,000)
5. On the "Do you have any Excess Roth Contributions" answer "Yes"
6. On the "Enter Excess Contributions" screen enter the total excess contribution of $18,000
7. On the penalty screen enter the excess contribution amount of $7,000 withdrawn by the due date.

5. Yes, if you made an excess contribution in 2024 and withdrew the 2024 excess Roth IRA contribution plus earnings in 2025 before the due date, then you will get a 2025 Form 1099-R in 2026 with codes P and J. This 1099-R will have to be included on your 2024 tax return and you have two options:  

• You can wait until you receive the 2025 Form 1099-R in 2026 and amend your 2024 return or
• You can report it now in your 2024 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 2025 Form 1099-R into the 2025 tax return since the withholdings are reported in the year that the tax was withheld. The 2025 code P will not do anything to your income to the 2025 tax return income but the withholdings will be applied to 2025.

To create a Form 1099-R in your 2024 return please follow the steps below:

1. Login to your TurboTax Account 
2. Click on the "Search" on the top right and type “1099-R” 
3. Click on “Jump to 1099-R”
4. Answer "Yes" to "Did you get a 1099-R in 2024?"
5. Select "I'll type it in myself"
6. Box 1 enter total distribution (contribution plus earning)
7. Box 2a enter the earnings
8. Box 7 enter J and P
9. Click "Continue"
10. On "Is the IRA/SEP/SIMPLE box on this 1099-R checked?" screen answer "No, the box is blank"?
11. On the "Which year on Form 1099-R" screen say that this is a 2025 Form 1099-R.
12. Click "Continue" after all 1099-R are entered and answer all the questions.
13. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return".

Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2023" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2024

6. Yes, you will request a regular distribution of $18,000 (without earnings). You will get a 2025 Form 1099-R with code J. This distribution will be reported next year on your 2025 tax return and will resolve the excess and you no longer pay the 6% penalty. When TurboTax asks about net contributions prior to 2025 you will include the $18,000 excess contributions in the net contribution amount.

7. Yes, you will request the withdrawal of an excess contribution plus earnings for the 2024 excess contribution. The financial institution should be able to calculate the earnings. If these were contributions made in 2024 then you will get a 2025 Form 1099-R with codes P and J, box 1 showing the whole distribution (excess plus earning) and box 2a showing the earnings.   

8. No, after taking out the $18,000 as a regular distribution and removing the 2024 excess plus earnings you can keep the account open. You are not required to close the account or remove the rest of the funds.

Please see How do I amend my federal tax return for a prior year?