How to answer TT questions re Excess Contribution in Prior Years

[user17714508208]

It is now 2026 and I am working on 2025 return.  I made an excess contribution to roth IRA in 2024 but removed it before filing 2024 taxes (did not report gain on excess so will fill a 2024 amendment now that I have 1099-R).  Question is do I answer yes or no on 2025 return when it asks if I had an excess contribution in 2024 or prior years?  I feel like I should answer no since it was removed so therefore of no consequence but not sure it needs to be yes since I received a 2025 1099-R for the 2024 contribution.  Do I report the 2025 1099-R (for 2024 excess contribution or just ignore it for 2025 taxes and use for 2024 amendment?  Thanks for your help but have not found this specific question anywhere else.

[ReneV4 · Accepted solution]

Your feeling is correct. You should answer no when asked if you had an excess contribution in 2024. That question is designed to determine whether you still have excess funds in your Roth that need to be taxed or removed. Since you indicated that you have already removed them, you no longer have an excess to report.

Regarding the reporting of your 2025 1099-R, you must report the 2025 1099-R on your 2025 tax return. Even though it relates to a 2024 excess, the distribution took place in 2025, so the IRS expects to see it on your 2025 return. 

You will be amending your 2024 return, so you will report the earnings portion of the distribution (found in Box 2a of your 2025 1099-R) as Other Income on your amended 2024 Form 1040-X.

By separating the reporting of the distribution on your 2025 tax return, from the taxable earnings on your 2024 amended tax return, you are fulfilling your reporting requirements accurately.

[user17714508208]

Thank you so much for your response.  Thought I was good to go until I attempted to amend my 2024 return to report the gain from the excess contribution in 2024 (removed in 2025 before tax filing deadline).  You stated I should report as Other Income but when I use my 2024 TT desktop software to amend (and review instructions on line) it seems I need to manually add the 1099-R that I received for 2025 in 2026.  If I do that it ends up charging me a penalty for late removal even though I answered the question stating it was a timely removal.  Any tips on how this process should work?  What would I amend to report as Other Income if that is the correct process and do I have to explain what it is somewhere?  I did report the 2025 1099-R (for the 2024 excess removal) on my 2025 return.   Thanks again.

[RogerD1]

The 2025 1099-R that you received for the removal of the excess Roth plus contributions should get entered on your 2024 amended return since is it to correct the 2024 excess Roth contribution.  That 1099-R should have the contribution + earnings in box 1, the earnings only in box 2a, and codes P and J in box 7.  You should get a screen asking for the year of the 1099-R, which will be 2025.

To remove the 10% penalty on the earnings, you will get to a screen These situations may lower your tax bill.  You will enter the amount of earnings in the box for Corrective distributions made before the due date of return.

Since you report this 1099-R on your 2024 return, you won't report it for 2025.  Since you timely removed the 2024 excess contribution by the tax filing deadline, the 6% penalty for keeping excess contributions in the Roth IRA won't apply to 2024 or 2025.  And on your 2025 return, you would answer "no" to making excess contributions in a prior year.