As I was preparing my 2023 return with TurboTax, I realized I made an excess contribution to my Roth IRA in 2023. TurboTax prompted me to request a removal of the excess contribution plus earnings thereon prior to my (extended) tax filing deadline to avoid the 6% tax. I completed this and clearly communicated this to TurboTax via the prompts. The earnings amount was already known and I thought that would just be included in my 2024 return alongside the 2024 Form 1099-R for the transaction. But no, turns out the earnings need to be included in the year of the excess contribution (i.e., 2023). TurboTax clearly knows this and as I was just preparing my 2024 return instructed me to file an amended 2023 return. This raises a couple questions for me:
(1) Why doesn't TurboTax automatically prompt you file the 2023 return correctly, including the earnings on the excess contribution (if the amount is already known)?
(2) How can I avoid this issue in the future?
(3) Why does TurboTax not allow e-filing an amended return for prior years (e.g., file an amended return for 2023 in early 2025) even though the IRS allows it?
This is all just a ridiculous waste of time, hassle, and paper/ postage, for minimal earnings on the excess contribution. Supremely frustrating. I thought we pay TurboTax for getting this sort of thing right in the first place!?
