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Level 2
posted Mar 21, 2024 2:12:54 AM

How to enter to Turbotax for withdraw of excess Roth IRA contributions?

My situation:  I had contributed $6000 to Roth IRA in 2022. But in December 2023, I found out that I cannot contribute any because my income is over the limit. So, I withdrew the $6000 in December 2023 knowning it has passed the October 15th deadline.  So, I will need to pay 6% penalty for my 2022 return which I need to file a 2022 amendment.

 

Question for 2023 return when answering the question in turbo tax.  I enter the 2023 form 1099-R with excess contribution of 6000 and box 7 is J.  Then I complete the rest steps for the 1099-R form.  After that I answer below follow up questions.

 

On question "Enter Prior Year Roth IRA Contributions", do I add up all of my Roth IRA contribution since I opened the account?  I opened my Roth IRA in 2001.  So, I will add up every year from 2001 until 2022?  I did enter this number but this number does not show up anywhere in form 5329 of my return.

 

On question "Enter Excess Contributions", so I will enter 6000. Is that correct?

 

At the end, I have 0 additional tax penaly on my 2023 return. I think this is correct because I withdrew the excess contribution before December 31, 2023. Therefore, I do not have additional tax penalty for 2023 tax.  Please confirm.  And for the tax penalty for 2022 tax return, I will need to file a 2022 1040X amendment for it to pay for the 6% tax.  Is my understanding correct?

 

Lastly, for tax return 2022, since I was supposed to pay the 6%, but I have not yet pay for it until later this year when I file an amendment. Will I need to pay interest for the 6% tax I owe to IRS?

 

Thank you in advance!

 

0 3 2512
3 Replies
Level 15
Mar 21, 2024 6:26:04 AM

Congrats. you figured it out correctly.

I don't know if the IRS will charge you interest.

On 1040-X, ignore penalties. IRS will calculate it and if non-zero send you a bill.

 

You have until Tax Day, to remove a 2023 excess, or Oct 15 if you timely file Form 4868

 

@DatBio 

Level 2
Mar 21, 2024 4:19:49 PM

On question "Enter Prior Year Roth IRA Contributions", do I add up all of my Roth IRA contribution since I opened the account?  I opened my Roth IRA in 2001.  So, do I will add up every year from 2001 until 2022 for this entry?   This seems odd to me.

Level 15
Mar 21, 2024 5:30:31 PM

if you had earnings on the $6,000 the basis would be important.

in your case it doesn't matter.

If you want TurboTax to track your Roth basis, enter the amount. otherwise zero.