In 2018, I mistakenly over contributed to my Roth IRA because my income level was too high. So I had Fidelity return the excess contribution to my savings account. Why would I have to pay tax on that? The money came from my savings account and was returned to my savings account.
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You should have gotten a 1099-R for the withdraw of the excess contribution plus earnings. The code in box 7 should show that it was a withdraw of excess contributions plus earnings (code 8 or P). And only the earnings should be taxable. The 1099-R needs to be entered in TurboTax.
From Publication 590-A: For purposes of determining excess contributions, any contribution that is withdrawn on or before the due date (including extensions) for filing your tax return for the year is treated as an amount not contributed. This treatment only applies if any earnings on the contributions are also withdrawn. The earnings are considered earned and received in the year the excess contribution was made.
You should have gotten a 1099-R for the withdraw of the excess contribution plus earnings. The code in box 7 should show that it was a withdraw of excess contributions plus earnings (code 8 or P). And only the earnings should be taxable. The 1099-R needs to be entered in TurboTax.
From Publication 590-A: For purposes of determining excess contributions, any contribution that is withdrawn on or before the due date (including extensions) for filing your tax return for the year is treated as an amount not contributed. This treatment only applies if any earnings on the contributions are also withdrawn. The earnings are considered earned and received in the year the excess contribution was made.
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