Excess Roth IRA contribution clarification needed

Forum|Forum|6 years ago
February 3, 2020
1 reply
0 views

I made a 1500.00 excess contribution to a Roth IRA in Oct 2019. The excess contribution and the earnings ($116) on the excess were withdrawn in Jan 2020. I do not have any updated tax forms from the brokerage and do not know if I will get them, if at all, before the tax deadline. How would this be entered into TurboTax? Do I enter $7500 which then tells me I made excess contribution or do I enter $6000 for the Roth contributions? I am under 59-1/2 so I know I have to pay a penalty (10% I think) on the $116. I do not have a updated 5498 or 1099-R. I read a similar post where Macuser_22 answered the post but Im still a bit confused how EXACTLY to enter it in TT.

TurboTax Self Employed Online

Best answer by DaveF1006

You tell TurboTax that the excess has been removed so a penalty is not applied and the excess does not carry forward. You would enter $7500 as the total amount of your contribution. As you proceed with the entry, Turbo Tax will indicate that you have an excess contribution of $1500 and will ask you if you plan on withdrawing this before the due date of your return.(April 15)

Since you have already withdrawn the excess contribution, you will say "yes".The penalty will not be applied based on this answer..

To enter your Roth IRA contribution:

On the left side of your screen, click Federal.
At the top of your screen choose Deductions and Credits.
Scroll down to Retirement and Investments.
Click Start on Traditional and Roth IRA Contributions.

DaveF1006Answer

Level 15

Since you have already withdrawn the excess contribution, you will say "yes".The penalty will not be applied based on this answer..

To enter your Roth IRA contribution:

On the left side of your screen, click Federal.
At the top of your screen choose Deductions and Credits.
Scroll down to Retirement and Investments.
Click Start on Traditional and Roth IRA Contributions.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

Anonymous

Thank you very much for that answer. If I may,. I'd like to ask a couple follow up questions... It asked for the value of my Roth IRA's on Dec 31, 2019. Which I obviously add all my Roth balances together that I contributed to in 2019 as of Dec 31. Question is, should that amount include my excess contribution and excess earnings?

Secondly, where do I enter my earnings on excess contribution of I don't have a 1099-R?

Thank you in advance

DaveF1006

Level 15

1) Just enter the amount of your Roth value without the excess earnings amount.

2) Next, you will receive a 1099R next year to report your 2020 tax year. The 1099R will show the amount of the total Distribution plus the excess earnings amount in Box 1 and then show just the taxable amount of the distribution in Box 2A, which should just be the excess earnings amount. IRS will know the amount of the contribution you returned because there will be a code P in box 7 indicating that it is a return of capital. Any amount taxable in Box 2A will assumed to be excess earnings.

The reason why you will report excess earnings on 2020 return is because you received it in 2020 thus it is 2020 income to be reported on your return. Don't report it for tax year 2019.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"