Roth Contribution and Excess in 2022 filed taxes doesn't match what happened, Issues with 2023 edits

[NedTaxBux]

2022 I made a Roth Contribution $3220 which had $920 excess ($4140 total) over my adjusted Roth contribution limit.  I told financial institution to withdraw the $920 but in reviewing the statements, they withdrew the full $4140.  

So what do I do now with the software thinking I have $920 in excess that really isn't there.  Also the ability to change the forms worksheets is limited so I have not been successful to zero everything out in the forms.   Any advice on how to manipulate the TT software to get it to work out right for 2023?   No contributions slated for 2023.     Also do I need to amend my 2022 taxes to correct the issue with the financial institution error?

thanks in advance!

[DanaB27]

To confirm, did you request the withdrawal of excess contributions plus earnings? If yes, then your 2023 Form 1099-R should have code P and J. And this has to be entered on your 2022 return since the earnings in box 2a are taxable in 2022.

If you requested the excess contribution plus earnings before the extended due date of the 2022 return then you should not have a 6% penalty on your 2022 return (check if you have Form 5329 part IV). If this applies to you then can delete the entry on the "Enter Excess Contributions" screen, since you didn't have a 2022 excess contribution.

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 "Do you have any Excess Roth Contributions" answer "Yes"
5. On the "Enter Excess Contributions" screen delete the entry

"For purposes of determining excess contributions, any contribution that is withdrawn on or before the due date (including extensions) for filing your tax return for the year is treated as an amount not contributed. This treatment only applies if any earnings on the contributions are also withdrawn. The earnings are considered earned and received in the year the excess contribution was made." (Pub 590-A)

[NedTaxBux]

Thanks for the reply, I can add some context

At the time of filing for 2022, I paid the excess contribution tax.  Knowing I was over and my financial institution could not act in time for adjustment or recharacterization for last years filing deadline.   So all actions done by the financial institution were done after filing 2022 taxes and now the full contribution $4140 was withdrawn from the Roth.  Do I need to amend the 2022 tax return to keep records straight with government, showing that overage is now no longer existing?  Do I need some other paper trail for auditing purposes?

I never got a 1099-R form for the contribution/withdrawl to my knowledge.  The full withdrawal (+earnings=none) was taken within the same day it was deposited according to my financial statements within a month of filing day last year (so no time to gain any earnings).  I'll look again to confirm, I import data from my financial institution so the numbers should be correct.

I typically import the 2022 tax return into 2023 so all that information carried over.   I found that I had to start a fresh 2023 tax return (without prior year imports) to be able to have a return which eliminated the excess Roth Contribution from 2022 from carrying over into 2023.   

[DaveF1006]

You will need to amend your 2022 return to report the taxable earnings earned.  To amend:

To amend your return using Turbo Tax Online.
 

1. Log into Turbo Tax
2. Select Scroll down Your tax returns & documents in your landing page.
3. Select Amend (change) 2022 return. 

To amend using the 2022 Desktop Software, go to:
 

1. Federal Taxes
2. Other Tax Situations>other tax forms
3. Amend a return

Once you are working in the return.

1. Inside TurboTax, search for 1099-R and select the Jump to link in the search results.
2. Answer Yes on the Your 1099-R screen,
3. Click on the box that you are creating a substitute 1099-R
4. Then select Continue.
5. In order to create a substitute 1099-R, you will need to obtain and name, address, and payer TIN as required so you can record the information properly on the form. You may need to contact Fidelity for this information or perhaps you can get information from their website.. 

The codes you will need for box 7 are J and P. Since this is a Roth IRA the only amount that is taxable are any earnings on the excess contribution. 

You would report the earnings in Box 2A as this amount is taxable. If you file this amendment, you do not need to report your 2023 1099R.

@NedTaxBux