How to report your excess contribution earnings in FreeTaxUSA ?

nkafeel
nkafeel Member Posts: 1 Newcomer
edited March 28 in Filing my taxes

So, I made 7,000 contribution to my roth ira in 2024. In January 2025, I realized, I was above the income limit. I contacted my broker and they did a return of excess in January 2025. I did make a profit of approximately 1000 dollars. How do I report this in freetaxusa? I wont receive my 1099-R until next January. Please provide step by step. I looked up a few forums. but cant fine the answer, Chatgpt says to

  1. In FreeTaxUSA, go to the “Income” section.
  2. Scroll down to "Other Income."
  3. Find the option for:
    • "Other income not already reported on a Form W-2 or 1099."
  4. Roth IRA contribution earnings.
  5. Enter the amount of the earnings: $1,000.
  6. This puts the $1,000 on Schedule 1, Line 8z, and it flows to your Form 1040, Line 8 as part of your total income.

Is this step correct?

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Answers

  • KeriC
    KeriC FreeTaxUSA Agent Posts: 186

    Hi nkafeel,

    We have noticed that ChatGPT does not always answer tax-related questions correctly.

    If you've talked to your plan administrator and know you'll be receiving a 1099-R with code "P" in 2026 you could do the following to include the excess Roth IRA contribution on your 2024 tax return to avoid having to amend your 2024 tax return later:

    1. Get the gross amount distributed to you for excess Roth IRA contributions from your plan administrator.
    2. Get the taxable amount of that gross amount distributed from your plan administrator. (Roth contributions would already be included in your income so they shouldn't be included in the taxable amount here)
    3. Enter a Form 1099-R on the Your Retirement Income (Form 1099-R) screen in the retirement income section.
    4. Choose Form 1099-R, 401(k)/pensions/IRA distribution on the Type of 1099-R screen.
    5. Choose Enter it Manually on 1099-R Entry Method screen.
    6. For Box 1 enter the gross amount from your plan administrator
    7. For Box 2a enter the taxable amount from your plan administrator
    8. For Box 7 enter code 8.

    Once you receive your 1099-R with code "P" in 2026, confirm that it matches what you entered on your 2024 tax return. If it doesn't, you'll need to amend your 2024 tax return and replace the information you enter for the 1099-R above with code 8 for the information on the 1099-R with code "P" you received.

  • Contribution401
    Contribution401 Member Posts: 2 Newcomer

    Most of the time, the plan administrator won’t provide the Payer ID (EIN) because they manage multiple plans and don’t know in advance which specific Payer ID will appear on your future 1099-R. That’s why the advice to submit a “fake” 1099-R can be problematic or even counterproductive.

    Has anyone found a reliable workaround if you're unable to get the Payer ID from the plan administrator but still want to report the excess 401(k) contribution correctly in the current tax year?

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