2023 Excess Roth IRA Contribution Made in 2024

[helpplease44]

Need help completing my 2023 taxes (I filed the extension and now they are due Oct 15) with the following scenario:

$2,537-excess contribution made on 2/9/2024 for tax year 2023 (year prior contribution to Roth IRA)

$67.78-earning from $2537 excess contribution made in 2024 for tax year 2023.

Removed both $2537 and $67.78 in 2024 before Oct 15 deadline from Roth IRA.

Questions-

1) Do I fill out form 5329 for 2023 tax year or 2024 tax year and how so? I believe I will only owe taxes on the $67.78 earnings but not the 10% early withdrawal penalty since I removed before the extended Oct 15 deadline for the 2023 taxes.

2) Do I fill out form 1099R only for 2024 tax year or do I need to report for 2024 tax year? 

3) Is there anything else that needs to be reported for tax purposes?

I want to be able to avoid completing an amended tax return for 2023. 

Thank you!

[fanfare]

The allocable earning belong on your 2023 tax return.

If you don't want to have to amend, you should include that amount in your original 1040 filing Line 4b.

Nothing goes on your 2024 return, unless the custodian withheld income tax (yes it has happened to some people).

Search the forum for how to use 1099-R  Code PJ to put that amount on your 2023 tax return.

There is no penalty so you don't need the form 5329.

@helpplease44 

[helpplease44]

I read on turbotax before the following which is why I am confused:

"If you made the contribution to your Roth IRA in 2024 (between January 1, 2024 and the 2023 filing deadline without extensions) but you designated it as a 2023 contribution and you withdrew it in 2024, the Form 1099-R you get will be for 2024. Include the Form 1099-R on your 2024 return. Your Form 1099-R will have code 8 and a code J in box 7."

[helpplease44]

Dates of everything occurred in 2024-

2/9/24- $6,500 contribution last year for roth ira 2023

3/31/24 and 6/30/24- Interest paid 

8/29/24- withdrawal of excess contribution last year ($2537 removed)

8/29/24- excess earnings withdrawal 

[fanfare]

The post you quoted above is not correct.

Yes, misinformation on the forum causes confusion.

THe 1099-R you will get in the future - Feb 2025 - will be a 2024 1099-R with  Code PJ which means prior which means 2023.

TurboTax 2024 will instruct you to amend.

@helpplease44 

[helpplease44]

The quoted paragraph I posted was not in a forum but in instructions on TurboTax when I first discovered the excess contribution. That is why I am confused on how to proceed.

I have not received the 1099-R form since everything occurred from Feb, 2024-this past month but I believe I should be receiving a 1099-R form in Jan, 2025.

[helpplease44]

Thank you! Any advice on this is much appreciated! @dmertz and @Opus17

[fanfare]

Did you decide what to do?

Enter a made-up 1099-R with code PJ

put the earnings $68 in box 1 and box 2a

don't check any boxes

don't check the IRA/SEP/SIMPLE box because you have a Roth IRA.

The trick is to tell TurboTax you have a 2024 1099-R

It should ask you that in the Step by Step process.

This should give you the earnings in line 4b

@helpplease44 

[helpplease44]

I appreciate all of your help and responses.

I guess I am just confused on why the 1099-R needs to be placed in the taxes for 2023 when all of this occurred only in 2024 and none occurred in 2023.

[fanfare]

See most recent IRS Pub 590A for the IRS documentation, which , unfortunately, contradicts the interpretation of our guru @dmertz.

Although code PJ is the expected document, @dmertz recently informs us that

some custodians may code 8J, which more closely matches your intuition.

If you can call Monday, maybe the custodian can tell you what they will do.

@helpplease44 

[helpplease44]

@fanfare 

Hi again,

I did not end up doing what you advised and just waited to receive my 2024 1099-R form. They did use distribution codes of J and P. They placed $2604.78 in the gross distribution (1) but put "$0.00" in 2a taxable amount and checked marked "taxable amount not determined."

I am in the process of amending my 2023 taxes.

Questions-

1) I entered the 2024 1099-R form as it was sent in my amended 2023 taxes but how do I report the $67.78 excess earnings withdrawn to be able to pay taxes? Do I state it is a "substitute 1099-R form" and change the taxable amount to $67.78 and then write in the explanation that they did not add it in or is there another form I need to use to report these earnings?

2) Should this affect both my federal and state taxes for the earnings? I work and live in Maryland therefore my taxes are MD but this RothIRA bank is only in Florida where I am originally from and the state on it says FL and the address is my parents' Florida address. Will this affect anything?

3) Do I need to report the 2024 1099-R form on my 2024 taxes still?

Sorry I am just stressing over all this and just want this to finally be over.

[fanfare]

You're working with a bank. Banks are notorious for giving you an incorrect 1099-R.

The taxable amount is determined. (as discussed previously ).

Uncheck that box and enter the $68 in 2a, which is what you would have done last year if you followed my advice.

@helpplease44 

[helpplease44]

@fanfare 

On more question, I was reading a different thread and someone mentioned the amount of "excess earnings withdrawal" then goes into your "modified adjusted gross income" thus affecting how much I could contribute again to my 2023 roth iRA even though this all took place in 2024, including the excess earnings interest made. Is this true? Because then that means I still overcontributed to my rothIRA even though I took all the precautions and did the reduced contribution limit calculation. 

Thank you for any and all advise and help.

[helpplease44]

It is now saying that I overcontributed still for my 2023 RothIRA in 2023 since they are counting the interest earned in 2024 of $67.78 to my 2023 modified adjusted gross income. Is this correct?