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Level 2
posted Feb 18, 2020 3:19:37 PM

Roth IRA excess contribution made THIS year for previous year. When do I declare earnings?

Hi there,

 

On January 2020 I made a 6000$ contribution to my Roth IRA for tax year 2019.

Now (February 2020) I realized that my MAGI was too high and I need to take out the contribution plus earnings.

When do I pay taxes on the earnings?

 

If the contribution was made in 2019, then I should pay taxes now (tax year 2019).

But since the contribution was made in 2020 (although for tax year 2019), and the IRS (pub 590 A) says "The earnings are considered earned and received in the year the excess contribution was made.", does it mean that I should pay taxes on the earnings in tax year 2020?

If so, how do I report this on TurboTax? Should I do nothing this year (as if the contribution was never made?)

 

Hope the situation is clear.

Thanks!

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1 Replies
Expert Alumni
Feb 21, 2020 10:38:40 AM

You can report the contribution using a substitute 1099-R in the Retirement Plans section.

 

This will report the income in 2019 and you will receive the 1099-R for 2020 that you will not need to report on your 2020 return since you have already reported the information on your 2019 return.