Roth contribution in 2017 for 2017. Income exceeded max. Withdrew contribution and interest in 2018. Turbo says interest is 2017 income???
If you withdrew an excess contribution plus earnings to avoid a penalty before the due date then the IRS considers the earnings earned and received in the year the excess contribution was made. Therefore since the excess contribution was in 2017 then the earnings are considered to be earned and received in 2017.
From IRS Pub 590-A page 43/44:
"Withdrawal of excess contributions. For purposes of determining excess contributions, any contribution that is withdrawn on or before the due date (including extensions) for filing your tax return for the year is treated as an amount not contributed. This treatment only applies if any earnings on the contributions are also withdrawn.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."
If you withdrew an excess contribution plus earnings to avoid a penalty before the due date then the IRS considers the earnings earned and received in the year the excess contribution was made. Therefore since the excess contribution was in 2017 then the earnings are considered to be earned and received in 2017.
From IRS Pub 590-A page 43/44:
"Withdrawal of excess contributions. For purposes of determining excess contributions, any contribution that is withdrawn on or before the due date (including extensions) for filing your tax return for the year is treated as an amount not contributed. This treatment only applies if any earnings on the contributions are also withdrawn.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."