How can fix the over contribution to roth ira due to income limits in years 2020 and 2021
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You need to withdraw the excess that you contributed or reduce your allowed contribution in the current year or previous years by the excess contribution amount to remove the excess contribution. For example, if you were allowed to make a ROTH IRA contribution in 2022 in the amount of $6,000 and you didn't make that contribution, you can reduce your excess contribution from previous years by that amount. If there is still an excess amount left, you can make a distribution from the IRA of the remaining excess and you will no longer have an excess contribution. You must also withdraw the earnings on the excess contribution, your broker can determine that amount for you. You will have to pay tax on the earnings that you withdraw.
If you didn't report the excess contribution in previous years when it occurred, you will need to amend your return in those years to report it and pay the penalty tax due.
If you need to amend your return, you will see an option to do that on your home page when you log into TurboTax. Look at the bottom of the page, under Your Tax Return and Documents. Click on the year you want to amend and choose the Amend (Change) option.
You have it right. And TurboTax can file a return for those years for you but you would first have to enter all of the data from the original returns into the system, tell TurboTax that you mailed the return in and then amend the returns. It may be easier to go back to the tax advisor who did the original returns.
You need to withdraw the excess that you contributed or reduce your allowed contribution in the current year or previous years by the excess contribution amount to remove the excess contribution. For example, if you were allowed to make a ROTH IRA contribution in 2022 in the amount of $6,000 and you didn't make that contribution, you can reduce your excess contribution from previous years by that amount. If there is still an excess amount left, you can make a distribution from the IRA of the remaining excess and you will no longer have an excess contribution. You must also withdraw the earnings on the excess contribution, your broker can determine that amount for you. You will have to pay tax on the earnings that you withdraw.
If you didn't report the excess contribution in previous years when it occurred, you will need to amend your return in those years to report it and pay the penalty tax due.
If you need to amend your return, you will see an option to do that on your home page when you log into TurboTax. Look at the bottom of the page, under Your Tax Return and Documents. Click on the year you want to amend and choose the Amend (Change) option.
Thank you for taking my question. I was not eligible to contribute to contribute to Roth IRA at all. But I had mistakenly contributed to Roth IRA (instead of traditional) to max the IRS limit ($6000) for years 2020, 2021 and 2022. In March 2023, I recharacterized the 2022 Roth contribution to Traditional IRA and did a back door conversion back to Roth. So, looks like I need to withdraw all the contributions I made for 2020 and 2021. Amend tax returns for years 2020, 2021, 2022 and pay penalty. Also pay penalty in 2023 and 2024 tax returns. Did I get that right? I had a tax advisor file my taxes in those years (not turbo tax). Is it possible to use TT to file amendment for those years?
You have it right. And TurboTax can file a return for those years for you but you would first have to enter all of the data from the original returns into the system, tell TurboTax that you mailed the return in and then amend the returns. It may be easier to go back to the tax advisor who did the original returns.
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