excess IRA contribution

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I made excess IRA contribution in 2023 but I am going to correct that with my bank in March of 2024, what should I input in the 2023 return and what would I expect for 2024, will I receive 1099R?

DanaB27Answer

Employee Tax Expert

Thank you for the clear direction. Mine is the traditional IRA instead of Roth IRA.

If you withdrew a 2023 excess traditional IRA contribution plus earnings in 2024 before the due date, then you will get a 2024 Form 1099-R in 2025 with codes P and 1. This Form 1099-R will have to be included on your 2023 tax return and you have two options:

You can wait until you receive the 2024 Form 1099-R in 2025 and amend your 2023 return or
You can report it now in your 2023 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 2024 Form 1099-R into the 2024 tax return since the withholding is reported in the year that the tax was withheld. The 2024 code P will not do anything to the 2024 tax return income but the withholding will be applied to 2024.

To create a Form 1099-R in your 2023 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 2023?"
Select "I'll type it in myself"
Box 1 enter total distribution (contribution plus earning)
Box 2 enter the earnings
Box 7 enter P and 1
Check the "IRA/ SEP/ SIMPLE" box
Click "Continue"
On the "Which year on Form 1099-R" screen say that this is a 2024 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 2022" you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2023.

Please follow these steps to tell TurboTax that you withdrew the excess contribution amount on the penalty screen:

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Continue until the penalty screen and enter the excess contribution amount withdrawn.

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TomK2023

Alumni - Intuit

You can contribute no more than $6,500 ($7,500 if you're 50 or over) to all of your traditional and Roth IRAs. Any more than that is considered an excess contribution and will be taxed at 6% per year.

To steer clear of the 6% tax on excess contributions, file a withdrawal request. Contact your financial institution and request to withdraw the excess contribution, plus earnings, by the due date of the return (including extensions).

The earnings are included as taxable income for the year the excess contribution was made.

Your IRA contributions are reported on Form 5498, IRA Contributions Information. Your IRA trustee or issuer—not you—is required to file this form with the IRS, usually by May 31. You won't find this form in TurboTax, nor do you file it with your tax return.

To enter your 2023 IRA contributions (money you put into your IRA):

Sign in to your TurboTax account.
Open or continue to your return.
In the search bar, type ira contributions and select the Jump to link in the search results.
We'll take you to the Traditional IRA and Roth IRA screen, where you can start the IRA interview.

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tman19Author

Level 3

So I should enter the contribution first and then go to type in the 1099 substitution to input the withdrawal as well as the gain after my financial institution confirmed the withdrawal and gain amount?

DanaB27

Employee Tax Expert

If you withdrew all of your Roth IRA contribution then you do not need to enter it at all in the IRA contribution under Deductions & Credits. If you entered it already then you can tell TurboTax that you withdrew the excess contribution amount on the penalty screen:

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

You will get a 2024 Form 1099-R in 2025 with codes P and J for the withdrawal of excess contributions and earnings. This 1099-R will have to be included on your 2023 tax return and you have two options:

You can wait until you receive the 2024 Form 1099-R in 2025 and amend your 2023 return or
You can report it now in your 2023 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 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 do anything to the 2024 tax return income but the withholdings will be applied to 2024.

To create a Form 1099-R in your 2023 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 2023?"
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 the "Which year on Form 1099-R" screen say that this is a 2024 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 2022" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2023.

Please see What happens if I made an excess Roth IRA contribution for additional information.

If you had an excess traditional IRA contribution instead of an excess Roth IRA contributions then please let us know and we will be happy to provide the instructions.

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