Amended 2023 resulting in excess Roth per form 5329

[potatopotato]

Hello community!
First time inquirer here.

I am in the process of amending the 2023 tax year to correct (lower) the carryovers.  This process is causing the income to be higher.  Due to this, my wife and I now have excess contributions per form 5329 (line 24) and the penalty (line 25).  In 2024 tax year (we have not filed), we cannot contribute to Roth.  My question is:
1. I understand that it has passed the cut-off for tax year 2023, so we are responsible for the penalty.  Does the 2023 1040-X amount owe already include the penalty?
2. If so, then we only need to withdraw the excess per the form 5329 line 24?  No need to worry about the earnings?

I hope tax gurus can give us some enlightenment.  

Thanks!

[fanfare]

@potatopotato 

after tax due date including extensions: you distribute the excess amount being carried forward on 5329,
(or offset it with currently allowed contribution) .
Amended return(s) will be needed supplying that Form 5329 since there is a 6% penalty per year on accreting excess contributions .
Earnings stay in the Roth account.

Consult your custodian to obtain the correct removal form for this case.

==

You must also add 2024 Form 5329 to your current tax return.

[fanfare]

HOW TO FILE

Do not include your old 1040 nor your revised 1040 because the Form 1040-X reflects any changes there and becomes your new tax return.

Include any new/corrected document only if it shows federal tax withheld, and include in order only those Sequence Numbered tax forms and Schedules that changed or were added due to your amendment.
Attachment Sequence Number is on all the forms and Schedules that come after 1040.

If you are using TurboTax you have to do this by visual comparison. The program won't break out those pages for you.
If your amendment dropped a form,
you should include with Form 1040-X a new copy of the form(s) with -0- in the appropriate lines.
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If any forms specify an attachment, put all those attachments at the end in the same order as the forms they go with.
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Mail to the address shown for your location in the most recent Instructions for Form 1040-X.

[dmertz · Accepted solution]

1.  When amending with TurboTax, you should see TurboTax adding Forms 5329 to your tax return, one for each of you, and including the penalty on Schedule 2 line 8, propagating to showing a change on Form 1040-X line 10 to be included in your balance due with the amendment.  If you are not able to apply the excesses as contributions for 2024, your 2024 tax return will also include Forms 5329 calculating the 6% penalties on the excesses.

2.  Correct.  Each of you must request an ordinary Roth IRA distribution equal to the amount on line 24 of your respective Forms 5329.  This will eliminate the excesses on your 2025 Forms 5329.  (Don't confuse the IRA custodian by requesting this distribution be done by a return of contribution.  IRA custodian's often somehow mistakenly process the distribution as a return of contribution before the due date of the tax return even when there has been no such contribution.)