How is a corrective withdrawal from Roth IRA treated in subsequent tax years?

[rcs1]

Hello, I realize there are a bunch of seemingly related questions on this topic but I can't figure out a straight forward answer, this is my situation:

In January I decided to start contributing to a Roth IRA not realizing I exceeded the gross income limit and made a 5.5k excess contribution intended for 2017.

In TT I followed the advice in the software to withdraw the $5504 that was in my account to avoid the 6% penalty that would have been incurred if I had left the amount in the account past the filing deadline (with no distributions or contributions showing in my filing for 2017.) 

I am well below the age limit for a qualified distribution, does this mean I will incur a 10% early withdrawal penalty for the 5.5k contribution I almost immediately withdrew in 2018? How will this situation be reflected in the forms for 2018?

Thanks!

[MaryK1 · Accepted solution]

Because you made the contribution in 2017 but withdrew it before the due date of the tax return, you will not incur the 10% penalty.  Next year, you will receive a 1099-R for the $5504, if which the $4 interest earned while it was in your account will be income, the rest is return of your contribution and not taxed.

[rcs1]

Thanks!

[MaryK1]

Glad to help!