2025 Roth Excess Contribution + Earnings Withdrawn in March 2026, Entering 1099-R in 2025 Return, Box 2A Taxable $3225, Box 7 P&J, Added Tax is $1,076 33% of $3225 Taxable Amount - Too High! WHY??

[MrOzone]

I may be getting an incorrect 10% added penalty tax applied here, not sure.  The box 2a $3,225 taxable earnings amount should be taxed at 24% Federal, and not 33%.  Really need some help here on specifically how to enter this 1099-R for correct Federal tax on the 2025 earnings.  Please walk me through the 2025 TurboTax entry steps. 

[AmyC]

Corrective distributions removed by the tax deadline are no longer subject to the 10% early withdrawal penalty. Follow these steps:

Enter the 1099-R:

Go to Federal > Wages & Income > Retirement Plans and Social Security > IRA, 401(k), Pension Plan (1099-R).

You can use your broker's information to enter details like broker name, address, EIN, etc.

1. Box 1 gross distribution 
2. Box 2a taxable amount 
3. Box 7 code P to let the IRS know you took it in 2026 for prior year.
4. Penalty Exception: If TurboTax tries to apply a 10% early withdrawal penalty on the earnings, continue through the screens until you reach "Special Situations" or "Penalty Exceptions."
5. Select the exception for "Corrective distributions made before the due date of the return." This will zero out any penalty on Form 5329.

Verify the Math:

Check your Form 1040, Line 4b. It should show $3,225 as taxable income.

Check Form 5329. Line 2 should now show the $3,225 as an exception, and Line 4 (the actual penalty) should be $0.