topic Re: Excess Roth IRA coding in After you file

Excess Roth IRA coding

Sas0798 — Mon, 01 Jul 2024 20:07:08 GMT

Made $7500 excess for 2023 in 2024, and have NIA of $1070. Will I owe interest on associated cap gains if I don't pay gains now via a 2023 amended return, making my own 1099-R with codes P&J?

I've started in TurboTax and taxes of $399 show which is 37% which seems crazy considering my effective tax rate was 8%.

Had all reversed before 2023 tax deadline so no penalty.

Re: Excess Roth IRA coding

fanfare — Tue, 02 Jul 2024 04:02:33 GMT

your allocable earnings are not capital gains, that is ordinary income to be included on 1040 Line 4b.

As pointed out by dmertz elsewhere you might get a code 8J or code PJ depending on the custodian.

Usual assumption on this forum is code PJ but according to Pub 590 in your case it should be 8J which means you will report this on your 2024 tax return.

@Sas0798

Re: Excess Roth IRA coding

Sas0798 — Tue, 02 Jul 2024 16:23:02 GMT

Thanks. So even though the contribution was for 2023, I report on 2024 tax return vs. amending 2023?
Don’t understand why short term gain I made gets classified as income…

Re: Excess Roth IRA coding

fanfare — Mon, 08 Jul 2024 02:25:19 GMT

how do you want it to be classified?

The tax on short term gains is the same as the tax on regular earned income.

However, IRAs do not get capital gains treatment, neither Short Term nor Long Term.

In other words, Schedule D is not used.

@Sas0798

Re: Excess Roth IRA coding

Sas0798 — Mon, 08 Jul 2024 09:40:26 GMT

That is true, wasn’t thinking! I didn’t realize Schedule D not used. First time dealing with a Roth. Thank you.