Excess Roth IRA Contribution – Do I need to amend my tax?

[helloaddyline]

Hello!

My husband and I each made Roth IRA contribution for 2023 before we realized that we couldn't. Thankfully, I realized this before the April 15, 2024 deadline, so I contacted my broker and withdraw the excess contribution. I made a profit of about $700, while my husband took a loss on his contribution. We both received 1099-R in 2024 for the excess contribution. My questions are as follow:

1. I entered both 1099-R in the 2024 tax, that is correct?

2. TurboTax told me that I would need to amend my 2023 tax? Is that something that I need to do? If so, do I need to enter both my husband and my 1099-R?

3. Since my husband took a loss, I'm guessing there's no additional tax and penalty on his part? Since I made a profit, this would be taxed and penalized?

Any guidance would be appreciated. Thank you!!

[MinhT1]

Yes.

You would need to amend your 2023 return to report that the excess contributions for both you and your spouse had been withdrawn. You enter the 2024 forms 1099-R with code PJ in box 7, and specify that they are for tax year 2024.

Your earnings will be taxed, but no longer subject to the 10% early withdrawal penalty (this is a new disposition of the Secure Act 2.0).

Your husband's loss is not deductible.

For your 2024 tax return, there is no need to enter these 2 forms 1099-R (as they now have been reported for 2023).

[helloaddyline]

Hello! 
First of all, thank you for your help.

I would enter them for 2023 return even though the two forms show 2024 on it? How would i specify that they are for tax year 2024? I checked the 2023 turbotax and didn't see the option to specify. Also, when I enter the 2024 1099-R, the 23 version of the turbo tax code says they are for tax year 2022, which is not true.

Thank you,

[DanaB27]

You can indicate the year in the follow-up question therefore you still select code P and ignore that its states "taxable in 2022".

1. Click on the "Search" on the top right and type “1099-R” 
2. Click on “Jump to 1099-R”
3. Enter the Form 1099-R with code P and J
4. On the "Which year on Form 1099-R" screen say that this is a 2024 Form 1099-R.
5. On the "Your 1099-R Entries" screen and add the second Form 1099-R and repeat above steps.
6. Click "Continue" after all 1099-R are entered.
7. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings from box 2a under "Corrective distributions made before the due date of the return".

[fanfare]

Since your husband had negative earnings, there is no reason to amend.  

If it is a joint return the net allocable earnings are your positive earnings. negative earnings are ignored.

@helloaddyline 

[helloaddyline]

Thank you!

I think I still have to amend because mine is positive.

[helloaddyline]

Thank you!
I updated according to your instruction and ran the smart check and received the following question.

What would I put in this Line A (for CA state tax amend)?  I don't have any other information on my 1099-R other than box 1, 2a and PJ code in box 7. 

2b boxes are not checked.

Thank you,

[DanaB27]

You will enter the earnings from box 2a of your Form 1099-R.