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posted Feb 21, 2025 8:00:23 AM

Reporting removal of excess traditional IRA contribution at a loss

For tax year 2024, I contributed $7,000 to a traditional IRA.  I realized my income exceeded the limits for IRA contributions. Rather than keep this as a non-deductible contribution, I had Schwab remove this as an excess contribution (this has been completed before the filing deadline).  There was a $100 loss so the distribution was $6,900. Since I removed the excess contribution in time, there should be no tax implications.  However, I am trying to figure out if I still need to report this distribution? 

 

I won't receive a 1099 until 2026 from Schwab. So it seems like my options are to create a dummy 1099 now or wait until I get the 1099 from Schwab in 2026 and then go back and ammend my 2024 filing?  Or since there was a loss and thus no taxes owed, can I skip reporting this transaction altogether?

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1 Replies
Expert Alumni
Feb 23, 2025 1:36:08 AM

The best option would be to create create a dummy 1099-R now. TurboTax will add an explanation statement with your return.

 

To create a 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 2 enter the earnings of $0
  8. Box 7 enter P
  9. Check the "IRA/ SEP/ SIMPLE" box
  10. Click "Continue"
  11. On the "Which year on Form 1099-R" screen say that this is a 2025 1099-R.

 

Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2023" you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2024.