How can I report withdrawal of excess contributions to my IRA?

[MaryK4]

If you made an excess contribution in 2024 and withdrew the 2024 excess Roth IRA contribution plus earnings in 2025 before the due date, then you will get a 2025 Form 1099-R in 2026 with codes P and J. This 1099-R will have to be included on your 2024 tax return and you have two options:  

• You can wait until you receive the 2025 Form 1099-R in 2026 and amend your 2024 return or
• You can report it now in your 2024 return and ignore the 1099-R when it comes unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding. Then you must enter the 2025 Form 1099-R into the 2025 tax return since the withholdings are reported in the year that the tax was withheld. The 2025 code P will not do anything to the 2025 tax return income but the withholdings will be applied to 2025.

To create a Form 1099-R in your 2024 return please follow the steps below:

1. Login to your TurboTax Account 
2. Click on the "Search" on the top right and type “1099-R” 
3. Click on “Jump to 1099-R”
4. Answer "Yes" to "Did you get a 1099-R in 2024?"
5. Select "I'll type it in myself"
6. Box 1 enter total distribution (contribution plus earning)
7. Box 2a enter the earnings
8. Box 7 enter J and P
9. Click "Continue"
10. On "Is the IRA/SEP/SIMPLE box on this 1099-R checked?" screen answer "No, the box is blank"?
11. On the "Which year on Form 1099-R" screen say that this is a 2025 Form 1099-R.
12. Click "Continue" after all 1099-R are entered and answer all the questions.
13. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return".

[ChuckZ56]

I made an excess contribution to my Roth IRA in 2022 (didn't realize it was an excess contribution until I completed my 2022 tax return) and the excess contribution and earnings were refunded in 2023. I received a 1099-R in 2023 showing the full amount of the refund (excess contributions plus earnings) with only the earnings showing as taxable,. The earnings were reported as income on my 2023 tax return and I was also assessed a 6% penalty on the amount of the excess contribution. Somehow this is still carrying over to 2024 and I am seeing another 6% tax penalty as if the excess contribution had not been refunded in 2023. It seems to be a result of the transfer of information from the 2023 tax return and I can't override it to show there is no longer an excess contribution or to eliminate the 6% penalty for 2024 (which presumably will also be there in future years).   

[VictoriaD75]

On your 2023 return, did you report the withdrawal of the excess contribution? You can remove the carryover from the prior year. You can try deleting Form 5329 on your return. To remove the form:

1. Under the Tax Tools menu on the left, choose Tools
2. Select Delete a Form
3. Scroll through your return until you find Form 5329, click Delete to the right of the form
4. Confirm that you wish to delete the form

Excess Roth Contributions

@ChuckZ56 

[Chuck19561]

Thanks, I think I reported the withdrawal of the excess contribution (I received a 1099-R in 2023 which showed the excess contribution as the Gross Amount and the income earned during the period as the Taxable Amount and I included the 1099-R info in my 2023 TurboTax return, including the amounts in each of those boxes). In any case, I did delete Form 5329 from my 2024 return but the additional tax on the excess contribution was still reflected on Form 1040 (and it wouldn't let me manually override the Form 1040 amount to change it to zero) . However, I then went to the IRA worksheet and manually update the excess contribution to reflect zero and then the additional tax on Form 1040 went to zero. I think I am all good now and I assume when the 2024 info gets transferred to the 2025 return, the excess contribution will no longer be reflected based on its deletion from the 2024 worksheet, so hopefully all set for this year and going forward. Thanks for the help.