How to input to turbotax return of 2024 Excess ROTH IRA contributions/earnings without schedule 5329 6% extra tax

Forum|Forum|1 year ago
February 25, 2025
1 reply
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I made an $8,000 2024 excess contribution to my ROTH IRA. The custodian has withdrawn from the ROTH the excess contribution and associated earnings. I need to report on my 1040-SR line 4a the gross amount of the withdrawal and on line 4b the taxable earnings. Using the steps I've found on-line to add a 1099R to accomplish this Turbotax completes form 5329 (additional taxes on IRA) and adds the $480 6% extra tax. Since the contribution was removed prior to the tax filing deadline I do not need to pay this. How can I input this information to Turbotax without it calculating the extra tax? Thank you for any help you can provide.

MinhT1

Level 15

If you withdrew your 2024 excess contribution to your Roth IRA before the due date of the 2024 tax return (April 15, 2025), make sure that you also withdraw the related earnings.

On your 2024 tax return, you do not report the excess contribution as it has been withdrawn. There is no 6% excise tax either as the excess has been withdrawn.

The earnings have to reported and taxed in 2024.

For this, you would create a 2025 form 1099-R with the total distribution (excess plus earnings) in box 1, the earnings in box 2a and code PJ in box 7. You then enter this 1099-R on your tax return, and the earnings will be taxed. When entering this form 1099-R, make sure to indicate that the year on the form is 2025, as this is a replica of the form you will receive for year 2025 in 2026.

If there is a loss, that loss is not deductible.

When you receive the 2025 form 1099-R with code PJ in box 7 (in 2026) for this withdrawal, there is no further action needed.

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dgJuneauAuthor

Level 2

Thank you for the information. However, as happened previously following similar instructions, turbotax still creates a form 5329 and calculates on lines 23 through 25 a $480 (6% on $8,000) additional tax on the IRA contribution withdrawal that is brought forward to schedule 2 and then the 1040SR. This is what I am having a problem with, keeping turbotax from calculating and adding this additional tax. Thank you.

MinhT1

Level 15

You must have entered in TurboTax that you made a Roth IRA contribution of $8,000 in 2024.

Go back to the IRA contributions section and delete that contribution (as it has been withdrawn).

To go back to the IRA contributions section:

In TurboTax Online, open your return
Click on Search (magnifying glass icon) at the top right of your screen
In the Search box, enter IRA contributions and click Enter
In the search result box, click on Jump to IRA contributions
TurboTax will take you directly to the section where you can start entering or editing your IRA and Roth IRA contributions.

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