I contributed to a Roth IRA this year, not realizing with my tax status and income that I wasn't allowed. I have withdrawn the excess funds. Do I need to put that info on my return?

[ChristinaS · Accepted solution]

You made an excess contribution in 2016, correct? If you have earnings on that contribution, they also need to be withdrawn. You will get a 1099-R for the withdrawal of the excess contribution next year, but the earnings are taxable on your 2016 return. Instead of waiting a year for that 1099-R and having to amend 2016, you should account for that 1099-R now. The broker should give you a statement showing the earnings calculated as part of this withdrawal of your contribution.

Remove the contribution from IRA contributions under Deductions and Credits

Enter the 1099-R under Wages and Income- Retirement Plans and Social Security

If you have the money in a popular brokerage company, you can probably get their EIN online rather easily.

Box 1- the total amount that came out (contribution plus earnings)

Box 2a- the taxable earnings

Enter Code J (AND Code 8 if under 59 1/2) in Box 7

Don't check the IRA box

You will type a brief statement explaining your excess contribution and how the earnings got calculated.

Next year, you'll get a 1099-R with Code P on it. Code P will mean taxable in 2016. And you will already have accounted for that.

[steph1131988]

Thank you!  Yes, I had made an excess contribution for 2016.  I have already made an excess contribution for 2017 as well; which I also withdrew.  Should I lump 2016 and 2017 excess contribution earnings together on the 1099-R?

[macuser_22]

"Enter Code J (AND Code 8 if under 59 1/2) in Box 7"  That is not quite correct.

For a Roth it is *always* a J8 reguardless of age.   A code J by itself is a normal Roth distribution.  It is the 8 that says that it is a return of contribution.   A 8 by itself is for a 401(k) return and places the box 2a amount on line 7 as wages, not on line 15b as required.  For a Roth return of contribution in the current tax year both a J and a 8 (J8) are always required in box 7.

[macuser_22]

A contribution made in 2017 and returned must be reported on your 2017 tax return next year, not 2016.