Hi all,
I made excess contributions to a Roth IRA in 2024. The excess was removed from the account in March along with a Net Income Attributable (NIA).
As far as I can tell I don't have to pay the 6% penalty as the excess was removed before the deadline. I assume though that I have to include the NIA as income on a 1040X, but I'm unclear on how to do that. I've looked through the instructions for Form5329 but there doesn't seem to be any info on how to report the NIA.
Could someone get me pointed in the right direction?
Had the NIA originally been included on From 1040, it would have been included on line 4b. This would have increased AGI. Note, however, that changes in AGI can have side effects. These side effects can further change AGI, deductions or tax credits, so the addition of the NIA can result in a change being shown on line 1 of Form 1040-X, there could be changes that need to appear on other lines of Form 1040-X. You would use the explanation section of Form 1040-X to indicate that the changes are the result of this additional reportable income.
When using TurboTax to prepare the amendment, indicate to TurboTax that you are preparing an amendment, enter the code JP 2025 Form 1099-R that you expect to receive near the end of January 2026 and indicate that it's a 2025 Form 1099-R. TurboTax will recalculate your entire tax return and populate Form 1040-X to show which items from your originally filed tax return have changed.
Note that if your 2024 tax return originally included a Form 5329 that reported the excess contribution and assessed the 6% penalty, you'll need to include a corrected Form 5329 showing $0 as the amount of the excess and penalty because TurboTax otherwise simply omits this form when it would show zero amounts.
Had the NIA originally been included on From 1040, it would have been included on line 4b. This would have increased AGI. Note, however, that changes in AGI can have side effects. These side effects can further change AGI, deductions or tax credits, so the addition of the NIA can result in a change being shown on line 1 of Form 1040-X, there could be changes that need to appear on other lines of Form 1040-X. You would use the explanation section of Form 1040-X to indicate that the changes are the result of this additional reportable income.
When using TurboTax to prepare the amendment, indicate to TurboTax that you are preparing an amendment, enter the code JP 2025 Form 1099-R that you expect to receive near the end of January 2026 and indicate that it's a 2025 Form 1099-R. TurboTax will recalculate your entire tax return and populate Form 1040-X to show which items from your originally filed tax return have changed.
Note that if your 2024 tax return originally included a Form 5329 that reported the excess contribution and assessed the 6% penalty, you'll need to include a corrected Form 5329 showing $0 as the amount of the excess and penalty because TurboTax otherwise simply omits this form when it would show zero amounts.