Retirement tax questions

1. No, you do not need to report the 2023 excess contribution since you requested the withdrawal of excess contribution plus earnings before the due date. You should not have the 6% penalty on this amount. You should have a 2024 Form 1099-R with code P and J for the return of excess contributions plus earnings.

2. Yes, you will need to amend the 2023 return to report the earnings from box 2a of the 2024 Form 1099-R with code P and J. On your 2023 return:

1. Click on the "Search" on the top right and type “1099-R” 
2. Click on “Jump to 1099-R”
3. Enter Form 1099-R
4. On the "Which year on Form 1099-R" screen say that this is a 2024 Form 1099-R.
5. Click "Continue" after all 1099-R are entered and answer all the questions.
6. 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 2022" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2023.

Also make sure you indicate in the IRA contribution interview that you withdrew the excess contribution by the due date. On your 2023 return:

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
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 2022
7. Continue until the penalty screen and enter the 2023 excess contribution amount as withdrawn.

3. Entering the Form 1099-R with code J will resolve the 2022 excess on your 2024 return:

1. Click on "Search" on the top and type “1099-R” 
2. Click on “Jump to 1099-R” and enter Form 1099-R with code J
3. Click "Continue" on the "Review your 1099-R info" screen
4. Answer all the questions and make sure you enter the net contributions prior to 2024 on the "Enter Prior Year Roth IRA Contributions" screen (include the 2022 excess contribution but not the 2023 excess 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 2022.

4. You should have a 2024 Form 1099-R with code J for the return of the 2022 excess contribution without earnings since it was removed after the due. You will need to pay the 6% penalty on this excess contribution on your 2022 and 2023 returns. If you did not then you will need to amend the 2022 return.

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