How do we get Turbotax to enter our returned excess Roth IRA contributions & earnings onto 1040 line 4a & 4b, per form 8606?

[pakman]

We had no excess contributions in prior years, and returned the excess and earnings before filing the 2024 taxes. TurboTx is correctly leaving form 5329 blank, but is not filling in lines 1040 4a and 4b

[DanaB27]

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 your income 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".

Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2023" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2024.

[dmertz]

Code P in box 7 of a 2024 From 1099-R means that the amount is taxable on your 2023 tax return not on your 2024 Tax return.  When a code-P 2024 Form 1099-R is entered into 2024 TurboTax, TurboTax will properly not put any of the amounts on your 2024 Form 1040 lines 4a or 4b because the amounts are reportable on your 2023 Form 1040 lines 4a and 4b.  The only thing about a code-P 2024 Form 1099-R that is reportable on your 2024 tax return is tax withholding.  (However, tax withholding is not normally done on returns of contributions.)