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Contributed to a roth IRA in 2025 for tax year 2024. Requested return of excess before deadline.

joy0

What do I answer in this part?
under common deductions/credits > ira contributions > did you contribute to an IRA? and following parts

my case:
I contributed $7000 to a roth IRA in 2025 for tax year 2024 on 3/2025. On 3/30/2025, I requested return of excess because I wasn’t eligible not having earned income.

questions I’m not sure how to answer:
did you make any traditional or roth ira contributions during 2025?
yes/no
(probably I answer yes because I did make contributions even if I did return of excess before tax deadline?)

did you have excess IRA contributions in 2024?
yes/no
(do I answer yes? because I contributed then did return of excess or no? because I took all the money out through return of excess (with loss $60) before tax deadline in 2025?)

If I say no to the question above, this following prompt shows up next:
Enter your roth ira contributions you made during 2025:
do I say 7000? even if I did a return of excess? or do I say 0 because I took it out by return of excess?

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GeorgeM

Hello joy0:

While you effected the Roth IRA contribution in March 2025, and soon thereafter withdrew the funds contributed, because you designated the contribution as a 2024 contribution, you need to report the excess contribution and subsequent withdrawal on your tax return for 2024. Because it appears that you withdrew the excess contribution before the filing deadline for your 2024 tax return (April 15, 2025), you will not be assessed the 6% tax penalty on your excess contribution.

Moreover, because it appears that you had no gains for the limited time your funds remained in your Roth IRA, you won’t have to contend with reporting any gains. Unfortunately, the loss you realized is not a deductible loss.

Because you withdrew the funds from your Roth IRA in March 2025, you should have received, earlier this year, a 1099-R from your IRA custodian, and that 1099-R should have code P in Box 7. Code P in Box 7 indicates that your excess contribution, and any related earnings, relate to the prior tax year, namely tax year 2024, and not the current tax year, 2025.

Assuming you have a correct 1099-R, you can then amend your 2024 tax return to report the excess Roth IRA contribution and the subsequent withdrawal of such excess, all before the filing deadline of April 15, 2025.

You may want to contact Customer Support to further assist you with reporting your 2024 excess Roth IRA contribution, the fact that you withdrew such excess before the filing deadline, and the process to amend your 2024 tax return.

joy0

Hello! My 1099-R has code 8J.

joy0

Hello! My 1099-R has code 8J.

joy0

https://community.freetaxusa.com/discussion/comment/7749#Comment_7749

Hello GeorgeM, thank you for your comment. I have a follow up questions. You mentioned I might need to amend my 2024 return but my form 1099-R has code 8J and box 2a (taxable amount) is $0 (since I had a loss of about $60). Do I still need to amend my 2024 return? Or is reporting this 1099-R on my 2025 return enough to show the IRS the excess was removed?

GeorgeM

Hello joy0:

Given that your Box 7 codes are 8 and J, report the excess Roth IRA contribution and the withdrawal of same on your 2025 tax return. Unless you have some other reason for amending your 2024 tax return, do not amend your 2024 tax return to report your excess Roth IRA contribution and the subsequent withdrawal of same.

If you have not already done so, report your 1099-R by clicking on the Income tab, and in the drop down, click on Retirement Income (1099-R). After entering the 1099-R information, you may see a screen requesting an explanation for your withdrawal of the Roth IRA contribution, and you may also see a Yellow Alert advisory regarding code 8J in Box 7. Enter a brief explanation for the withdrawal and you can ignore the Yellow Alert as it is just an advisory notice.

Assuming you have reached the Summary tab in our software, you can click on the Summary tab and scroll down the screen where you can select the option to view your Form 1040. Take a look at line 4a on your Form 1040. On line 4a, you should see the amount of your Roth IRA contribution—the 7,000 contribution—and line 4b, the taxable amount, should be blank.

If line 4a reflects 7,000 and line 4b is blank, then you have nothing else to report and you don’t need to enter any information in the Deductions/Credits section of our software, at least with regard to your Roth IRA excess contribution and subsequent withdrawal.