Retirement tax questions

For 2023

On your 2023 return you will have to edit that you didn't withdraw the excess contribution by the due date and TurboTax will calculate the 6% penalty. You have to pay the 6% penalty on the contribution since you didn't remove the earnings. You can only avoid the 6% penalty if you withdraw the excess contribution plus earnings (IRS).

On your 2024 return:

You still have time to request the return on the 2024 excess contribution plus earnings until October 15, 2025. Then you can avoid having to pay the 6% penalty on the 2024 excess.

To resolve the 2023 excess on your 2024 return you could enter a substitute 2024 Form 1099-R with code 7 instead of the 2024 Form 1099-R with code P in TurboTax Online:

1. Click on "Search" on the top right and type “1099-R” 
2. Click on “Jump to 1099-R” 
3. Select "Change how I enter my form" on the "Let's import your tax info" screen
4. Select "Type it myself"
5. Fill out Form 1099-R with  distribution amount in box 1, box 2a blank, check the "Taxable amount not determined" in 2b, code 7 in box 7, and IRA/SEP/SIMPLE box checked.
6. Continue through the questions until the "Do any of these situations apply to you?" screen select "I need to file a substitute 1099-R" 
7. Continue through the screens and then add the Form 1099-R with code 8.

Note, if you enter a substitute Form 1099-R you might not be able to e-file. 

Then go to the IRA contribution interview:

1. Click on "Search" on the top right and type “IRA contributions” 
2. Click on “Jump to IRA contributions"
3. Select “traditional IRA”
4. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
5. Enter the amount you contributed
6. On the "Do you have any Excess Traditional IRA Contributions" answer "Yes"
7. On the "Enter Excess Contributions" screen enter the 2023 excess contribution amount
8. Say 'Yes" to "Contribution amount Withdrawn"
9. Enter the amount withdrawn on ethe "Enter Amount Withdrawn" screen
10. Say "Yes" on the next screen that this was reported on Form 1099-R.

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