Excess Contributions to Roth IRA spanning two years

[Jackie828]

I have a question about excess contributions to my Roth IRA.  When doing taxes in early 2023 for 2022, I discovered I was unable to make contributions to my Roth IRA because I ended up having to file MFS instead of MFJ as in past years.  I was able to get a distribution of all of my 2022 contributions prior to filing my taxes in April 2023.  In the deductions & credits section, I entered $6,996, the amount of the total Roth contributions for 2022, then entered $6,996, for contributions withdrawn before the due date.  The total contributions shown on summary page then showed $0.00 for deductions for Roth IRA in 2022.   In 2024, I received a 2023 1099-R showing a distribution of $5,730.91, because there was a loss in the total contribution.

So, prior to learning I could not make a Roth contribution since I had to file MFS, I had made $1,875.00 in contributions to my Roth IRA for the first three months of 2023.  I stopped making the contributions for the remainder of 2023, since I didn't know if I would be filing MFJ or MFS for 2023.   In 2024, it was again recommended that I file MFS for 2023, so I took a distribution of the $1,875.00 in 2023 excess contributions in March 2023 prior to the tax filing deadline.  As mentioned above, in 2024, I received a 1099 for tax year 2023 that showed the total distribution of $5,730.91, a loss from the actual contribution made, thus there was no taxable amount due.  I included the $5,730.91 distribution amount as income on my 2023 return since the 1099 said 2023.  In addition, in the deductions section, I again answered all off the questions about Roth IRA.  I entered the $1,875 for the contributions I had made for the first three months of 2023; for the question "Enter Excess Contributions for Prior Years, I entered $6,996 for the amount of excess contributions from 2022 (although I had already had taken the distribution of those prior to the 2022 filing deadline (as described above), and entered $1,875 for the amount of the 2023 contributions that were withdrawn before the filing deadline for 2023.   On the 2023, the summary page for deductions showed $0 for 2023, however, showed $6,996 for 2022.

Fast forward again to 2025, I received a 2024 1099-R for the distribution of $1,875 in excess contributions of in 2023.  The distribution amount was $2,500.73, greater than the $1,875 in contributions, so resulted in a taxable amount of $625.73.  Since the 1099-R says 2024, I was planning to include the distribution amount reported on my 2024 taxes as income.  Is this correct?  Also, in the deductions and credits section, should I input the $1875 in the question Enter Excess Contribution - your excess Roth Contributions for Prior Years, or should I put $0 since I had answered they were withdrawn on the 2023 filing?

Also, I was wondering if I maybe should not have included the excess contribution amount of the $6,996 in the question for prior years on the 2023 filing since I had withdrawn them and included them on the 2022?  If I shouldn't have included them, then I would need to file an amended return because it appears I overpaid taxes.  Is this correct?

Thank you for your input.  I appreciate any suggestions.  

[DanaB27]

The 2023 Form 1099-R with codes PJ should have been reported on your 2022 return but since you had no earnings there isn't any taxable income and you do not need to amend your 2022 tax return. It isn't an issue that you entered it on the 2023 return since the 2023 code P will tell TurboTax not add anything to your income in the 2023 tax return but any withholdings from box 4 or 14 will be applied to 2023.

You shouldn't have entered anything on the "Enter Excess Contributions for Prior Years" screen since you withdrew the excess contribution before the due date. You will need to amend your 2023 return to remove the entry and the 6% penalty. You will also enter the 2024 Form 1099-R with codes PJ on your 2023 tax return to report the earnings in box 2a.

1. Login to your TurboTax Account 
2. Click on the "Search" on the top right and type “1099-R” 
3. Click on “Jump to 1099-R”
4. Enter the 2024 Form 1099-R with codes PJ
5. Click "Continue"
6. On "Is the IRA/SEP/SIMPLE box on this 1099-R checked?" screen answer "No, the box is blank"?
7. On the "Which year on Form 1099-R" screen say that this is a 2024 Form 1099-R.
8. Click "Continue" after all 1099-R are entered and answer all the questions.
9. 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 2022" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2023.

Please make sure you delete the entry on "Enter Excess Contributions for Prior Years" screen during the IRA contribution interview on your 2024 and 2023 return since you withdrew the excess contributions before the due date.

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. On the "Enter Excess Contributions" screen delete the entry.

You do not need to enter the 2024 Form 1099-R with code PJ on your 2024 return unless you had tax withholdings. Then you must enter the 2024 Form 1099-R into the 2024 tax return since the withholdings are reported in the year that the tax was withheld. The 2024 code P will not add anything to your income in the 2024 tax return but the withholdings will be applied to 2024.