You will have to request a regular distribution of the 2023 excess contribution amount without earnings since it is after the due date. This distribution is will be reported on your 2025 tax return when you get the 2025 Form 1099-R with code J (if you are under 59 1/2). This distribution will resolve the 2023 excess contribution.
If hadn't already contributed the full amount for 2024 you could have applied the 2023 excess as a 2024 contribution. You could request to withdraw more of the 2024 contribution plus earnings so you can apply the 2023 excess to 2024 (instead of requesting a regular distribution of the 2023 excess). This way you would not have to pay the 6% penalty for the 2023 excess on your 2024 return. To do this you you will only enter in the IRA contribution interview the contribution amount that is left in the Roth IRA for 2024 and then you can apply the excess in the follow-up questions. For example, if you decide to request $2,000 plus earnings then you would only enter in the IRA contribution interview that you made a $5,000 Roth IRA contribution.
The earnings on the withdrawal of the 2024 excess contribution are taxable in the year that you made the contribution.
If you made an excess contribution in 2024 and withdrew the 2024 excess Roth IRA contribution plus earnings in 2025 before the due date, then you will get a 2025 Form 1099-R in 2026 with codes P and J. This 1099-R will have to be included on your 2024 tax return and you have two options:
- You can wait until you receive the 2025 Form 1099-R in 2026 and amend your 2024 return or
- You can report it now in your 2024 return and ignore the 1099-R when it comes unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding. Then you must enter the 2025 Form 1099-R into the 2025 tax return since the withholdings are reported in the year that the tax was withheld. The 2025 code P will not do anything to your income to the 2025 tax return income but the withholdings will be applied to 2025.
To create a Form 1099-R in your 2024 return please follow the steps below:
- Login to your TurboTax Account
- Click on the "Search" on the top right and type “1099-R”
- Click on “Jump to 1099-R”
- Answer "Yes" to "Did you get a 1099-R in 2024?"
- Select "I'll type it in myself"
- Box 1 enter total distribution (contribution plus earning)
- Box 2a enter the earnings
- Box 7 enter J and P
- Click "Continue"
- On "Is the IRA/SEP/SIMPLE box on this 1099-R checked?" screen answer "No, the box is blank"?
- On the "Which year on Form 1099-R" screen say that this is a 2025 Form 1099-R.
- Click "Continue" after all 1099-R are entered and answer all the questions.
- Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return".
Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2023" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2024.
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