DanaB27
Expert Alumni

Retirement tax questions

TurboTax will ignore the income on the 2024 return but apply withheld taxes to the 2024 return because of the code P. You do not get doubled taxed.

 

If you were in the phaseout range for Roth IRA contributions then the earnings from the returned excess contribution can trigger a new excess. You will need to pay the 6% penalty on your 2023 return.

 

If you can apply the excess contribution as a 2024 contribution then you can avoid paying the 6% penalty on your 2024 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. On the "Do you have any Excess Roth Contributions" answer "Yes"
  5. On the "Enter Excess Contributions" screen enter the total excess contribution from 2023
  6. On the "How Much Excess to 2023?" screen apply the 2023 excess to 2024.

 

 

If you cannot apply the 2023 excess to 2024 then you have to pay the 6% penalty on your 2024 return. You need to take a regular distribution without earnings to remove the 2023 excess contribution. You will get a 2025 Form 1099-R with code J (if you are under 59 1/2) in 2026. When you enter it next year on your 2025 return then it will resolve the excess contribution.

 

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