Return of excess roth ira contributions - how to report it?

joy0
joy0 Member Posts: 1 Newcomer
in Filing my taxes

Here's the situation:

  • I made a $7000 max contributions to roth ira and found out I'm not eligible since I didn't have an earned income. (only little dividends)
  • I filed for return of excess and got a return.

and here's where I'm confused:

  • FreeTaxUSA asks "Did you make any roth ira contributions during 2024: I said yes since I made a contribution in 2025 towards 2024. even though I did a return of excess.
  • Enter any roth ira contribution: I entered $7000
  • Then it shows "IRA contributions are limited to the earned income on your tax return. You currently have a total of $0 of earned income on your tax return. You have $7,000 of excess Roth IRA contributions. Excess IRA contributions will cause a tax penalty. You can reduce or eliminate the penalty if you withdraw the excess contributions before timely filing your tax return.
  • Did you withdraw any Roth IRA contributions by the tax filing due date? Yes/no - Is it correct to say yes? because I'm not sure if I can say that I withdrew it when I did a return of excess?
  • Enter any 2024 Roth IRA contributions you withdrew: I said $7000

and here's my question:

Can I enter that I withdrew it when I did a return of excess? Does a "Return of Excess" processed before the tax filing deadline count as a “withdrawal” in this context?

If so, should I answer “Yes” to that question and enter the $7,000 as 2024 Roth IRA contributions withdrawn?

Answers

  • MatthewD
    MatthewD FreeTaxUSA Team Posts: 581

    Hi Joy0,

    Make sure you answer the questions in the IRA Contributions section. You just need to answer question that you withdrew the excess. You have until April 15 to do that without running into penalties. Next year you will get a 1099-R.

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