How to enter excess Roth contribution removal properly in TurboTax Desktop

[movingmomma]

MFJ, and we both contributed a small amount to our Roth accounts in January of 2024 before we realized we'd be over the income limit for the year. Our custodian removed the contributions plus earnings in March of 2025.

I went through the Roth contribution step by step questions, and the total amount removed (original contribution plus earnings) now appears on the 1040 in box 4a, but there's no amount in box 4b, where I believe the earnings should appear. 

I did complete "made up" 1099Rs for each of us for this event. I checked box 2b (taxable amount not determined) and left box 2a blank per the custodian's projection of what will be on the 1099Rs when they are received, but should I uncheck box 2b and enter the earnings in box 2a, since I know them (the difference between the contribution and the total amount removed)?

How do I get the earnings to appear in the proper place, and are there any additional forms that I need to file with this year's return to properly account for this event?

[DanaB27 · Accepted solution]

Yes, you must uncheck box 2b and enter the earnings in box 2a.

Form 1099-R instructions state: "For the distribution of excess Roth IRA contributions, report the gross distribution in box 1 and only the earnings in box 2a. Enter Code J and Code 8 or P in box 7."

You will have Form 5329 include on your return, the earnings will be listed on line 1 and 2 with exception code 21. If you follow the steps below TurboTax will fill out all the necessary forms.

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 add anything to your income in the 2025 tax return but the withholdings will be applied to 2025.

To enter a 2025 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.

Also make sure you indicate in the IRA contribution interview that you withdrew the excess contribution by the due date:

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. Enter the Roth IRA contribution
5. Continue until the penalty screen and enter the excess contribution amount withdrawn.

[movingmomma]

Thank you, this is very helpful. Is Form 8606 required in this situation also?

[DanaB27]

No, Form 8606 isn't filled out for the return of excess contribution (IRS).