Roth IRA withdrawn excess contributions

Forum|Forum|3 years ago
March 7, 2023
9 replies
84 views

I contributed $6000 to my IRA in 2022 before realizing that my salary was going to increase enough to make me ineligible to make that contribution. I have since withdrawn the contribution plus earnings.

I will not be receiving the 1099-R form for this until early next year.

On these forums I have read that I can submit a manually-entered 1099-R on the basis of what I expect it to say.

I followed the advice here: https://ttlc.intuit.com/community/taxes/discussion/reporting-excess-roth-ira-contribution/00/1900728

I have done this and I believe things are in order on the federal side, but when I go to my state tax return, it is listing the $6000 plus earnings as additional income that I am getting taxed on. This shouldn't be the case, because the $6000 I contributed is already accounted for in my W2. I can't see a way to adjust this because it is taking the information from the federal return. How do I fix this issue?

Thank you

MichaelG81

Level 7

Yes, if this is a pre tax deferred plan or traditional IRA, when the excess is removed you will be taxed on the amount removed because it was basically deducted from taxes on your paycheck. So, when entering it, your federal due is supposed to go up, or your refund down, due to the contributions being counted as pretax dollars before the excess was recognized. When you now say they are not pre tax dollars you will see the tax appear; or when you say its not contributed to a tax advantaged plan or retirement account. Also, to avoid an additional 6% penalty you did right by removing the contribution and interest or earnings.

@taxpayer211

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taxpayer211Author

Level 2

Thank you for the reply. But this was not a pre-tax plan - it was a Roth IRA which I contributed to from my take-home pay (post-tax). Basically, I took $6000 of what I had in my checking account and deposited it into this Roth IRA, then withdrew $6000 (plus earnings) when I realized I wasn't eligible. The $6000 is already included in my reported AGI income because that's where it came from.

Is there some way to designate that as pre-tax? @MichaelG81

-edit

Actually, I may have figured it out. There is a section for: "Taxable IRA/Keogh Distributions"

Can I include $6000 as "Other Contributions Previously Taxed by the state" given that this is already included in my taxable income for this year?

MichaelG81

Level 7

No, if it was after tax money you can take the excess Roth IRA out without additional taxes, but still have to pay taxes from your W2 income. The only tax will be on earnings of the Roth. If not removed by April 15 , 2023, the general date, then an additional 6% penalty will apply, just let TurboTax know you are withdrawing the excess in the interview plus interest to remove penalty. Make sure to tell the Roth IRA admin that this is an excess withdraw.

If you have an excess on Roth you will have an excess on a traditional IRA pretax advantaged account too. You may have a plan at work that makes you ineligible or you made more than 6000 combined to a traditional or Roth IRA; or 7000 if catch up. This shows the maximum of how much you can contribute in case you have a plan at work or not.

@taxpayer211

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taxpayer211Author

Level 2

"No, if it was after tax money you can take the excess Roth IRA out without additional taxes, but still have to pay taxes from your W2 income. The only tax will be on earnings of the Roth. If not removed by April 15 , 2023, the general date, then an additional 6% penalty will apply, just let TurboTax know you are withdrawing the excess in the interview plus interest to remove penalty. Make sure to tell the Roth IRA admin that this is an excess withdraw. "

Yes, I get that, and I've entered into TurboTax that I have withdrawn the 6000. I also filled out a form 1099-R presumptively, to declare the earnings that I made. I have already withdrawn the 6000+earnings and it was labeled an excess withdrawal including earnings.

1- Is it appropriate to fill out the 1099-R as if I had received it already (it's not going to come until next year)

2- For my state return, is it appropriate to enter 6000 in the "Other Contributions Previously Taxed by the state" box? (In the "Taxable IRA/Keogh Distributions" section"?

@MichaelG81

Thank you

DanaB27

Employee Tax Expert

1) Yes if you know the earnings and total distribution amount then you can enter Form 1099-R as if you had received it to avoid having to amend your 2022 tax return.

2) Yes, for your state return you will enter the contribution amount in the "Other Contributions Previously Taxed by the state" box in the "Taxable IRA/Keogh Distributions" section.

@taxpayer211

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