Hello and sorry, I am getting frustrated with the program but maybe it is my fault.
I have no earned income but I contributed 8k to a Roth IRA in January 2024. I now realize I cannot make any contribution.
I entered the Excess amount in TurboTax Deluxe and it calculated tax on this 8k in addition to money I withdrew from a Rollover IRA as spending money. I also indicated I was withdrawing that same excess 8k amount (will do it this year but before April 15, 2025). But it did not recalculate the tax I owe. What am I missing?
I believe I have to create a 1099-R to show the interest I made on that excess contribution so that this can be taxed?
Thank you very much.
Gerry
If you indicated in TurboTax that you will withdraw your Excess Roth Contribution (plus earnings) before the tax filing date, you should not incur a penalty (or be taxed on that amount).
You can create a 1099-R to enter in TurboTax to report this, with Box 1 showing the amount of the Excess Contribution plus Earnings, and Box 2 showing only the Earnings amount.
In Box 7, use Codes P and J.
When asked What Year is your 1099-R, enter 2025.
Here's more info on Creating 1099-R to Report Excess Contribution and Earnings.
Thank you Marilyn!
1. I am 69-years old. Is the J code then correct for me as it says "Early Distribution ....". I also own the Roth account for more than 5 years.
2. I don't understand the P code here as is says now "Return of Contribution taxable in 2023". I made the contribution in 2024 and therefore the earnings on it too in 2024. So wouldn't the earnings be taxed in 2024?
Thanks again,
Gerry