topic roth excess contribution 2025 -- removed but how to report in 2025 return in Retirement tax questions

roth excess contribution 2025 -- removed but how to report in 2025 return

kovairent — Sat, 28 Feb 2026 15:46:22 GMT

Thanks in advance.

Made excess contribution to Roth IRA during the calendar year 2025.

Realized while doing tax return in Feb2026. (let us say the excess payment as $ x )

Understand can be recharacterized or removed before 15Apr26 and avoid 6% penalty.

Spoke to ROTH IRA administrator, they were helpful, transferred the entire excess payment

and the earnings made by excess payment to my regular (non-Roth non-IRA) brokerage account

within the same brokerage company.

The transferred amount is $ y = $x + $e (earnings made by $x during 2025). Obviously this earning

was made in year 2025. [The transfer was done in Feb 2026 ]

How do I report this earning Earnings $e made in year 2025 in my tax return the form for year 2025.

But the brokerage says that they will provide a 1099-R only in Jan2027, which will not be useful for

filing 2025 tax return before 15Apr2026.

How does one handle this?

thanks and good day

Re: roth excess contribution 2025 -- removed but how to report in 2025 return

ReneV4 — Mon, 02 Mar 2026 18:12:27 GMT

Since your Form 1099-R will not arrive until 2027, here is how to manually report your earnings on your 2025 tax return:

First, determine the taxable amount. Only the earnings are taxable because the amount of the excess contribution was already taxed before it went into the Roth IRA.

Next, you will report the earnings even though you don't yet have the Form by following these steps.

Go to Income on the left panel within your TurboTax account
Click on the +Add more income box
Scroll down to Retirement Plans and Social Security and click the down arrow to expand
Click Start to the right of IRA, 401(k), Pension Plan Withdrawals (1099-R)
Click on +Add a 1099-R, select the Enter a different way box, then Type it in myself
On the next screen, you can select Type it in myself, or other options, then Continue
Select the box on the top left for Financial institution or other provider (1099-R), then Continue
Enter the provider's information, then Continue
Enter the details from your Form 1099-R, enter total distribution in Box 1 and only the earnings in Box 2a
Ensure the IRA/SEP/SIMPLE box is unchecked
Use Distribution Code J & P in Box 7, then Continue
Choose Year 2026 as the year on your Form 1099-R
Continue until, "Tell us which person may have qualified for a penalty exception" and select the pencil symbol
Next, on the, "These situations may lower your tax bill" screen, enter the amount of earnings under, "Corrective distributions made before the due date..."

Re: roth excess contribution 2025 -- removed but how to report in 2025 return

kovairent — Tue, 03 Mar 2026 02:00:56 GMT

Thank you ReneV4. This is very helpful, but I don't do online turbotax, but/instead of desktop version.

It would be great if you could walk the menu/steps for the desktop version for this.

Again thank you very much.

Re: roth excess contribution 2025 -- removed but how to report in 2025 return

MarilynG1 — Fri, 06 Mar 2026 19:32:27 GMT

The steps are the same for TurboTax Desktop, except access the Wages & Income section from the top, and scroll down to the Retirement Plans topic.

@kovairent

Re: roth excess contribution 2025 -- removed but how to report in 2025 return

ps2022 — Tue, 10 Mar 2026 02:00:13 GMT

I have the same situation - in February of this year returning excess contributions and earnings for contributions made in 2025. A few questions:

Is the code for box 7 really P,J and not 8,J? The code for P references excess contributions and earnings taxable in 2024 or a prior year. My excess contributions and earnings are from 2025.

After I added the 1099-R using code 8,J I'm presented with a screen that says, based on contents of box 7 on the 1099-R I will need to pay extra taxes, the most common reason for withdrawing funds before reaching retirement age. I'm 66, so why am I being assessed this penalty?

Lastly, regarding your point #12, I don't see any field to enter a year on the 1099-R.

Thank you,

Re: roth excess contribution 2025 -- removed but how to report in 2025 return

RogerD1 — Tue, 10 Mar 2026 21:12:57 GMT

Yes, code P & J would be correct. Code P is advised for when a refund of excess Roth contributions is made. Be sure to use P & J on your 1099-R because some of the screens that are mentioned in the instructions won't show up if you enter 8 & J.

Once you have entered the 1099-R dollar figures and the box 7 codes of P & J, you'll get an information screen "How your taxes are looking so far". Clicking Continue will allow you to select a year for the 1099-R of either 2025 or 2026. Since you removed the Roth excess contribution and earnings in 2026, you would select 2026 here. You will get a 2026 1099-R for this from your IRA custodian next year, but since you entered it on your taxes this year, you can ignore it next year.

On "Do any of these situations apply to you?" answer None of these apply. Click Done of the Your 1099-R summary page.

After the disaster distribution screen, you will set "Let's see if we can lower your tax bill" - click Continue.

You'll get a screen about an Early distributions penalty. Click the pencil icon to the far right of your name to edit this section.

Identify the plan - check the box for IRA.

On the "These situations may lower your tax bill" page, scroll down to near the bottom to "Corrective distributions made before the due date of the return" - enter the amount of the earnings for the distribution in the box to the right of this. - Click Continue. This will remove the penalty on the distribution of earnings.

Re: roth excess contribution 2025 -- removed but how to report in 2025 return

Barry450 — Tue, 10 Mar 2026 21:18:39 GMT

I have the same situation as the original poster. With TT Premier, I get the following screen after step 12 of your instructions:

Do any of these apply to you?

I need to file a substitute 1099-R

The corrected box is checked on this 1099-R

None of these apply

If I check "None of these apply" it ends the session. I never get to steps 13 and 14 of your instructions.

Is this supposed to be, or am I doing something wrong?

Thanks.

Re: roth excess contribution 2025 -- removed but how to report in 2025 return

RogerD1 — Fri, 13 Mar 2026 21:04:22 GMT

You'll need to keep clicking on Continue for a few screens and you'll get to a screen "Your 1099-R Summary". You'll then click Continue for a series of questions before you get to a screen "Tell us which person may have qualified for a penalty exception". On this screen, click the pencil icon to edit for the Early distribution penalty exception.

Select IRA as the plan, then Continue.

On the next screen "These situations may lower your tax bill", you can enter the amount of the Roth earnings in a box near the bottom of the page title "Corrective distributions made before the due date of return."

You can then click Continue until you get back to the main Your Income page.

Re: roth excess contribution 2025 -- removed but how to report in 2025 return

user17733210759 — Sun, 15 Mar 2026 19:09:16 GMT

I have a question I did return excess contribution for 2025 contribution $3000 earnings @$374

I am amending tax on turbo tax , It shows I owe $90 for federal and MA $169. Even I removed contribution early and only earns $374. I didn't know which part I missed it. I did all the step you advice. Is it reasonable?

Thank you for you advice.

Re: roth excess contribution 2025 -- removed but how to report in 2025 return

RogerD1 — Thu, 19 Mar 2026 14:37:09 GMT

Those tax amounts do seem a little high, if the only additional income being reported on the amended return is the earnings from the excess Roth distribution on the amended return. It's hard to tell for sure what your expected tax liability may be without knowing other income for you.

If you are amending your return, be sure that your Federal and Massachusetts returns have both been fully processed before sending your amendment. If you are getting a refund from both, wait until the refunds have been deposited in your account before sending the amendment.

If you follow the directions in ReneV4's post, be sure that box 1 of your 1099-R input is $3,374, and box box 2 is just $374. Then you would have box 7 codes of P and J and you would not check the box for IRA/SEP/SIMPLE.

Then you would come to a screen asking which year is your 1099-R and you would select 2026

A few screens later you will get to a screen "Let's see if we can lower your tax bill" - click Continue.

You get a screen about an Early distribution penalty. Click the pencil icon to the far right of your name to edit this section.

Identify the plan - check the box for IRA.

On the "These situations may lower your tax bill" page, scroll down to near the bottom to "Corrective distributions made before the due date of the return" - enter the amount of the earnings for the distribution in the box to the right this then click Continue. This will remove the penalty on the distribution of earnings.

If you followed those steps, that will get your Roth distribution reported correctly.

[Edited 3/19/2026, 7:36 AM PDT, @user17733210759

Re: roth excess contribution 2025 -- removed but how to report in 2025 return

user17733210759 — Tue, 17 Mar 2026 00:35:00 GMT

Thank you for your advice.

Both had been fully processed. They already took out money from the account. Roughly total income around 280,000 paid for Federal about $18000 and MA $6000.

On this part "IRA/SEP/SIMPLE." I have to check this box even it is for Roth IRA? I saw description on the turbo tax online it said not for Roth IRA. ReneV4's post unchecked on that part as well. So should i check or leave it blank. I will try to redo it again.

If I follow step by step you from your advise so i don't have to change anything in state part?. Will it automatically adjust tax for me right?

Thanks again!

Re: roth excess contribution 2025 -- removed but how to report in 2025 return

RogerD1 — Thu, 19 Mar 2026 14:49:16 GMT

Considering your high level of income, the additional tax on your amended return may be more in line with the figures you got, but they still seem as though they may be a bit excessive (especially the Massachusetts tax)

And you are correct, the IRA/SEP/SIMPLE box is not checked in the 1099-R entry screen.

You should run through the state interview for Massachusetts after you change the 1099-R information, just to be sure everything there is being reported correctly. Your return for MA may get fixed by correctly entering the 1099-R, but you may want to be sure. A state tax of $169 on $374 of earning is unreasonably high - Massachusetts has a flat 5% tax on incomes below $1,038,150, so the tax on that should be closer to 5% of $374.

Re: roth excess contribution 2025 -- removed but how to report in 2025 return

user17733210759 — Fri, 20 Mar 2026 00:50:30 GMT

@RogerD1 I agreed . It seems like the MA state calculated whole contribution with gain 3374.2*5 % =169 on the turbo tax. Which part on the turbo tax do i need to take a look more? I have no idea. Please help..

Re: roth excess contribution 2025 -- removed but how to report in 2025 return

RogerD1 — Fri, 20 Mar 2026 14:00:51 GMT

It does appear that the entire contribution is being taxed to have that much tax. Here's how to fix it:

Go back in and edit your Massachusetts return
If you are on a screen "You've Finished Your Massachusetts Return ", click on Update for Adjustments. If not keep clicking through each screen until you reach one titled "Taxable IRA/Keogh Distributions - [name]".
Since the excess Roth contribution was money that you are already paying tax on, enter $3000 in the box for "Other Contributions Previously Taxed by Massachusetts", then Continue.
You can then keep clicking through the screens until you reach the end where you can review the state return.

This action will reduce the amount of Massachusetts tax that you owe down to 5% of the earnings.

Re: roth excess contribution 2025 -- removed but how to report in 2025 return

user17733210759 — Fri, 20 Mar 2026 16:04:45 GMT

@RogerD1 Thank you very much. It did reduce the amount of Massachusetts tax . My federal $90 MA$19.

I am really appreciated . Thank you again!

Re: roth excess contribution 2025 -- removed but how to report in 2025 return

user17763507766 — Thu, 16 Apr 2026 15:50:50 GMT

Hello, I also had an overcontribution to 2025 Roth IRA, removed with earnings in 2026. After going through steps in this discussion I'm finding the earnings increase MAGI by enough to reduce 2025 contribution limit further. Am I doing something wrong in Turbotax (Desktop Deluxe) or do I need to remove more from the Roth? I filed an extension and paid more than enough to cover whatever happens. Reduction amount and resulting penalty are both trivial so we could just pay it, but don't want this to follow us into future tax years.

Re: roth excess contribution 2025 -- removed but how to report in 2025 return

AmyC — Thu, 16 Apr 2026 23:39:46 GMT

Yes. According to IRS rules, if you remove an excess contribution before the filing deadline (including extensions), the earnings are taxable in the year the contribution was made (2025), even if you physically received the money in 2026.

Since these earnings are added to your Adjusted Gross Income (AGI), they do indeed bump up your MAGI. If you were already in the "phase-out" range for Roth contributions, this extra income can further reduce your allowed contribution.

Yes, you may need to remove even more. Follow these steps to see:

The 1099-R: Since you won't get the official 1099-R until next year, you must enter a "Substitute" or "Dummy" 1099-R in the Wages & Income section for your 2025 return.

Box 1: Total amount removed (Principal + Earnings).

Box 2a: Only the earnings portion.

Box 7 (Codes): Use Codes P and J. (P indicates it’s a taxable distribution for the prior year; J indicates it’s from a Roth).

The Contribution Section: Go back to Deductions & Credits → IRA Contributions.

Enter the full amount you originally contributed.

When TurboTax flags it as an excess, it will ask if you plan to remove the excess before the deadline. Answer Yes.

Enter the amount you actually removed. If the software says you still have an excess, you will need to contact your IRA custodian again to remove that secondary "sliver" of excess caused by the income bump.

@user17763507766