Help needed for 2024/2025 Excess Roth IRA Contribution Reporting

[Pumpkin1688]

Hello, We have unexpectedly exceeded the Roth IRA contribution earning limit for 2024, and is projected to exceed the same threshold for 2025 as well. For this reason, we need help on the excess contribution reporting. Details below: 1. We started contributing to our Roth IRA starting in 2023, and at that year we did not exceed the threshold limit. However, we did contribution $7000 in 2024 (for year 2024) and another $7000 in Jan 2025 (for year 2025). 2. We believe it is possible we may exceed the income threshold for 2025 again, so we have already requested and processed excess contribution and earnings withdrawl from our financial institution (Charles Schwab). They have already calculated the associated earnings for us for both contributions. Questions: 1. Charles Schwab may take some time to generate the 1099-R form for us, and we would like to get started ASAP to wrap up our taxes. In this case, can we enter the forms manually ourselves first? 2. Do we need to enter two 1099-R forms or just 1 for 2024 first and then hold off on reporting the 2025 contributions + earning for 2025's tax return? 3. For information required on the1099-R form such as payee, will that be the same information for our existing 1099 forms from Charles Schwab that we received from our regular Charles Schwab trading account? 4. Any detailed guidance on how to fill out the 1099-R forms is also greatly appreciated. Thank you!

[MinhT1 · Accepted solution]

Let's deal with the 2024 excess contribution first.

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On your 2024 tax return, you do not report the excess contribution as it has been withdrawn. 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 for tax year 2024.

For the excess contribution for 2025, as you withdrew the excess in 2025, you will receive in 2026 a form 1099-R with code 8J in box 7, that you will enter on your 2025 tax return.

[Pumpkin1688]

Thank you very much for your help!