I withdrew a previous year's excess Roth IRA contribution. Excess penalty removed, but I expected tax hit for early withdrawal. Why is it not showing as taxable on 1040?

[hads25]

- Excess contribution in 2020
- Removed amount in 2022
- Turbotax correctly removed excess contribution penalty from 5329
- Shouldn't it be a taxable distribution on 1040 line 4? Turbotax is showing taxable amount as 0. What do I need to do different in Turbotax to get it listed correctly?

[DanaB27 · Accepted solution]

No, it shouldn't be taxable in line 4b of Form 1040. If you remove a 2020 excess contribution after the due date of the 2020 tax return then you will take a regular distribution and only withdraw the excess contribution without the earnings. You can withdraw contributions you made to your Roth IRA anytime, tax- and penalty-free. 

1. Login to your TurboTax Account 
2. Click on "Search" on the top and type “1099-R” 
3. Click on “Jump to 1099-R” and enter all your 1099-Rs
4. Click "Continue" on the "Review your 1099-R info" screen
5. Answer all the questions and make sure you enter the net contributions prior to 2021 on the "Enter Prior Year Roth IRA Contributions" screen (you will include in the net contributions an excess contribution amount that was not removed by the extended due date of the return)
6. Answer the remaining question.

Please see What happens if I made an excess Roth IRA contribution for additional information.