TurboTax still applies a $390 excess Roth IRA penalty on Form 5329, Line 25, even though my 2024 earned income absorbed the excess. How do I remove the penalty?

[wonderful2]

2023, I over-contributed $6,500 to my Roth IRA and paid the 6% penalty. In 2024, I earned $8,000 in self-employment income, which should have absorbed the excess. However, TurboTax is still showing a $390 penalty on Form 5329, Line 25, even though the excess should be resolved. I’ve deleted and re-entered my Roth IRA info multiple times, but TurboTax still isn’t recognizing my earned income as fixing the excess. How do I remove this incorrect penalty?

[ThomasM125]

When you enter your Roth IRA contribution, you need to enter the excess you contributed in the previous year on the screen that says Do You Have any Excess Contributions:

Then you need to credit that excess toward your 2024 Roth IRA on the screen that says How Much Excess to 2024?:

You also have to enter the value of your Roth IRA at end of year: