I am entering mine and my husband's 2025 Roth contribution and it decreases my refund. I'm not sure how or why this is happening.

[gwen-green]

I've went back and taken it out and started over and it does it each time decreasing our refund by about two hundred dollars for each 8k Roth contribution.

[MindyB · Accepted solution]

Since Roth contributions are made with after-tax money, they don't provide a tax deduction to lower your bill. The most likely reason your refund is dropping is that your income exceeds the 2025 eligibility limits, causing a 6% excise tax penalty for an "excess contribution." Essentially, if you earned too much to qualify for a Roth, the IRS charges you a fee for putting money into one.

Here are the Roth limits: Amount of Roth IRA contributions that you can make for 2024

[dmertz · Accepted solution]

Either your modified AGI for the purpose exceeds the threshold above which you are ineligible to contribute the amount contributed you you have insufficient compensation (income reported on a W-2 or net earnings from self-employment) to support the contribution.

[gwen-green]

That's exactly the reason! I had no idea we were that close and we were over by 1k due to a retirement vacation payout. Thanks for the responses.  Luckily I was able to go in and adjust the Roth deposits and get a refund of the overage.