Roth IRA earnings from excess contribution

Forum|Forum|2 years ago
March 20, 2024
1 reply
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I realized that I shouldn't have contributed to Roth IRA last year and pulled out all my contributions + earnings. I will receive a 1099-R next year about this return of excecss. I wonder if I should report the earnings on my 2023 tax return or do it next year on my 2024 tax return after I receive the 1099-R?

The IRS says "The earnings are considered earned and received in the year the excess contribution was made." I made monthly contributions from Aug 2023 to Mar 2024, so I guess I should include the earnings in my tax return for 2023?

Also, how should I report the earnings without having received a 1099-R? Do I enter as miscellaneous income or somthing?

Thanks!!

MinhT1

Level 15

Yes, you should report the earnings on the excess contribution in 2023.

On your 2023 tax return, you don't report the excess contribution as it's been withdrawn. The earnings have to reported and taxed in 2023 as Other Reportable Income.

In TurboTax Online, open your return and follow these steps:

Click on Federal in the left-hand column, then on Wages and Income
Locate the Less Common Income section and click on the arrow on the right
Click Start next to Miscellaneous Income at the bottom
On the next page, click Start next to Other Reportable Income.

When you receive the 2024 form 1099-R with code PJ in box 7 (in 2025) for this withdrawal, there's no further action needed.

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Voilà12Author

Level 2

I noticed that I wrote "Date Excess Contribution was Made 03/01/2024" (the last day when I made a contribution) on my return of excess form to Robinhood. So I guess I might have to report the earnings as part of my income in 2024 rather than 2023 according to the IRS?

DianeW777

Level 15

No, you report the earnings in 2023. As indicated by @MinhT1, there will be nothing to do when you receive your 1099-R in 2025 (for 2024). Enter the interest earned for the excess contribution on your 2023 tax return, which is the correct action.

@Voilà12

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