How to report income derived from excess Roth IRA contribution?

[JBVTRC]

In February 2025, I made my full $8,000 2025 contribution to my Roth IRA. Huge capital gain amounts pushed me over the limit of being able to contribute, however. I've had the $8,000 reversed and deposited into my bank account, as well as approximately $1,000 in profits made on the $8,000. My question is how and where do I report these events in TurboTax? Does just changing the answer to what my contribution was from $8,000 to $0 cover it, or is there something else that is have to do. Also, how should the $1,000 in profits be reported?

[MinhT1 · Accepted solution]

If you withdrew your 2025 excess contribution to your Roth IRA before the due date of the 2025 tax return (April 15, 2026), make sure that you also withdraw the related earnings.

On your 2025 tax return, you do not report the excess contribution as it has been withdrawn. The earnings have to reported and taxed in 2025,

For this, you would create a 2026 form 1099-R with the total distribution (excess plus earnings) in box 1, the earnings in box 2a and code PJ in box 7. You then enter this 1099-R on your 2025 tax return, and the earnings will be taxed. When entering this form 1099-R, make sure to indicate that the year on the form is 2026, as this is a replica of the form you will receive for year 2026 in 2027.

When you receive the 2026 form 1099-R with code PJ in box 7 (in 2027) for this withdrawal, there is no further action needed.

[JBVTRC]

Wow, that was quick! Thanks!!!

[JBVTRC]

As a follow-up, how do I do this:

"When entering this form 1099-R, make sure to indicate that the year on the form is 2026".

I'm not seeing a place to indicate the year when I'm trying to create the 1099-R in TurboTax.

[RobertB4444]

In this instance you will not indicate that this is a 2026 1099-R in the program itself.  There isn't a place to enter that here.  Instead this is for your records - so that you do not enter the same 1099-R next year when you receive the physical copy.

@JBVTRC