topic Re: Which year should I report Excess Roth IRA contributions + interest withdrawn? in Get your taxes done using TurboTax

Which year should I report Excess Roth IRA contributions + interest withdrawn?

jackkgan — Sat, 22 Mar 2025 18:51:09 GMT

I had contributed to Roth IRA by mistake in Feb 2024 as I was not aware of the income limit. That earned an interest as well.

I realized that while filing taxes now and submitted Return of Excess contributions form to Fidelity. They returned both my contribution + it's interest earned by depositing into a non-retirement Fidelity account. Fidelity will send the 1099-R form in 2026.

I understand that the interest would be taxable though not my contribution to Roth IRA which I believe should be after tax.

Question:

Should I report any of that in my tax return that I am submitting now for 2024 by creating my own 1099-R or should I wait till next year to report both the corrections in the contribution and the interest earned?

Re: When should I report Excess Roth IRA contributions + interest withdrawn to IRS?

DanaB27 — Sat, 22 Mar 2025 10:58:53 GMT

Yes, the interest has to be reported on your 2024 return since the earnings have to be reported in the year they were made.

If you made an excess contribution in 2024 and withdrew the 2024 excess Roth IRA contribution plus earnings in 2025 before the due date, then you will get a 2025 Form 1099-R in 2026 with codes P and J. This 1099-R will have to be included on your 2024 tax return and you have two options:

You can wait until you receive the 2025 Form 1099-R in 2026 and amend your 2024 return or
You can report it now in your 2024 return and ignore the 1099-R when it comes unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding. Then you must enter the 2025 Form 1099-R into the 2025 tax return since the withholdings are reported in the year that the tax was withheld. The 2025 code P will not add anything to your income in the 2025 tax return but the withholdings will be applied to 2025.

To enter a 2025 Form 1099-R in your 2024 return please follow the steps below:

Login to your TurboTax Account
Click on the "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”
Answer "Yes" to "Did you get a 1099-R in 2024?"
Select "I'll type it in myself"
Box 1 enter total distribution (contribution plus earning)
Box 2a enter the earnings
Box 7 enter J and P
Click "Continue"
On "Is the IRA/SEP/SIMPLE box on this 1099-R checked?" screen answer "No, the box is blank"?
On the "Which year on Form 1099-R" screen say that this is a 2025 Form 1099-R.
Click "Continue" after all 1099-R are entered and answer all the questions.
Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return".

Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2023" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2024.

Also make sure you indicate in the IRA contribution interview that you withdrew the excess contribution by the due date:

Click on "Search" on the top right and type “IRA contributions”
Click on “Jump to IRA contributions"
Select “Roth IRA”
Enter the Roth IRA contribution
Continue until the penalty screen and enter the excess contribution amount withdrawn.

Re: When should I report Excess Roth IRA contributions + interest withdrawn to IRS?

sergioch — Thu, 10 Apr 2025 20:57:31 GMT

How do you report excess withdrawal done in 2025 but before the 4/15 deadline on 2024 tax return if there was a loss (NID was negative)?

(Also, how is this reporting done in online version of TurboTax?)

Re: When should I report Excess Roth IRA contributions + interest withdrawn to IRS?

DanaB27 — Sat, 12 Apr 2025 14:52:18 GMT

You will enter $0 for earnings.

Yes, you can do this in TurboTax Online.

To enter a 2025 Form 1099-R in your 2024 return please follow the steps below:

Login to your TurboTax Account
Click on the "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”
Answer "Yes" to "Did you get a 1099-R in 2024?"
Select "I'll type it in myself"
Box 1 enter total distribution (contribution minus loss)
Box 2a enter$0
Box 7 enter J and P
Click "Continue"
On "Is the IRA/SEP/SIMPLE box on this 1099-R checked?" screen answer "No, the box is blank"?
On the "Which year on Form 1099-R" screen say that this is a 2025 Form 1099-R.

@sergioch

Re: Which year should I report Excess Roth IRA contributions + interest withdrawn?

sudhjain — Sat, 12 Apr 2025 15:01:52 GMT

I had a similar situation. I was advised by Vanguard rep. that since this happened in 2025, you need to report with 2025 tax, that is in 2026.

Re: Which year should I report Excess Roth IRA contributions + interest withdrawn?

AnnetteB6 — Sat, 12 Apr 2025 15:25:16 GMT

The Vanguard rep is partially correct in that you will get the Form 1099-R in 2026 since the distribution occurred during 2025. However, it will not be reported on your 2025 tax return.

Since you made the excess contribution in 2024 and withdrew the 2024 excess Roth IRA contribution plus earnings in 2025 before the due date, then you will get a 2025 Form 1099-R in 2026 which should have codes P and J. This 1099-R will have to be included on your 2024 tax return and you have two options:

Amend your 2024 return after you actually have your 2025 Form 1099-R in hand.

You can report it now in your 2024 return and ignore the 1099-R when it comes unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding. Then you must enter the 2025 Form 1099-R into the 2025 tax return since the withholdings are reported in the year that the tax was withheld. The 2025 code P will not do anything to the 2025 tax return income but the withholdings will be applied to 2025.

If you wish to report the Form 1099-R now as part of your 2024 return without amending it later, go to the use these steps:

Go to Wages and Income > Retirement Plans and Social Security > Form 1099-R section of your return to add a Form 1099-R
Select "I'll type it in myself"
Box 1 enter total distribution (contribution plus earning)
Box 2a enter the earnings
Box 7 enter J and P
Click "Continue"
On "Is the IRA/SEP/SIMPLE box on this 1099-R checked?" screen answer "No, the box is blank"?
On the "Which year on Form 1099-R" screen say that this is a 2025 Form 1099-R.
Click "Continue" after all 1099-R are entered and answer all the questions.
Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return".

@sudhjain

Re: Which year should I report Excess Roth IRA contributions + interest withdrawn?

htritah — Mon, 14 Apr 2025 18:55:06 GMT

In early March 2025, I made an excess Rollover IRA contribution of $2000 to tax year 2024 and made an earning of $17 during March 2025. Both excess contribution and earnings were returned through Fidelity with a 10% tax withheld at the end of March. What is the next step? Do I need to file form 1099R for tax year 2024 before 4/15/25 to report the earnings? Or can it wait until 2025? If it can wait until 2025 after I receive the 1099R form from Fidelity, does that mean I have to file an amendment to 2024? Thanks!

I also made an excess contribution to my ROTH IRA account in the same timeline and returned it. But it incurred a loss so I assume I don't have to anything as long as it was returned?

Re: Which year should I report Excess Roth IRA contributions + interest withdrawn?

DanaB27 — Mon, 14 Apr 2025 19:37:14 GMT

You can check with your custodian but often financial Institutions will issue a 2025 From 1099-R with code 8 and J since you made the contribution in 2025 for 2024. A 2025 Form 1099-R with code 8 and J will be reported on your 2025 return.

Yes, if there was a loss then you have no taxable event but TurboTax will add an explanation statement to your return when you enter the Form 1099-R for the return of excess contribution.

@htritah