Do not use a substitute Form 1099-R
Instead you must fabricate a 2025 1099-R with the codes PJ and earnings in taxable amount box.
Tell TurboTax the 1099-R is a 2025 1099-R
whatever you chosse to apply to 2025 contribution it must be no more than your compensation, or $7,000 whichever is smaller. Otherwise you will be back in the same boat.
If you report the correct positive earnings now, you can ignore the 1099-R next year, assuming it agrees with your fabrication.
There is no longer a 10% penalty on the excess earnings removed before age 59 1/2.
You don't need an explanation statement for this scenario.
@Emy95
