Excess Roth IRA contribution for 2025, how to show on tax return

MMA
MMA Member Posts: 2 Newcomer

I made $7000 contribution to my Roth IRA in June 2025. Now while preparing to file the tax return, freetaxusa is showing me that I have an Excess Roth IRA Contributions.

I checked with custodian (Fidelity) and they have option which I can use to withdraw excess contribution. They also provide he calculation for earnings and how much to withdraw.

There is a loss in my Roth IRA account for 2025 and the fidelity calculation shows the Total amount to withdraw contribution, combined with earnings/loss is $5900.

My question is how do I show these all on my tax return. I want to show it this year itself, so that I don't need to file any amended return next year for 2025.

Deduction → IRA Contribution screens

If I am showing the $7000 contribution amount and $5900, its resulting in additional taxes. How do I show the amounts ?

Should I show $7000 as contribution amount and same $7000 as the amount withdrawn ?
Or
I should not be showing any contribution and withdrawn amount as I am doing it in the same year before filing deadline.

Retirement Income (Form 1099-R) screens

How should I show the amounts ?

  1. Box 1 : 5900
  2. Box 2a : 0
  3. Distribution Code : J
  4. IRA / SEP / SIMPLE not checked
  5. Standard 1099-R

If I am choosing Distribution Code : J

  1. its asking me additional questions and I need to provide the basis in Roth IRA contributions which I am showing as $7000
  2. it also shows $5900 in the 4a of 1040 and nothing on 4b of the sample return
  3. Form 8606 is also added to the tax return showing $5900 on line 19 and $7000 on line 22

If I choose Distribution Code : 8

  1. its shows me a yellow warning (Uncommon Distribution Code)
  2. it does not show anything on 4a and 4b on form 1040
  3. there is no form 8606 added to the return

With either of the Distribution Code, there is no difference in the total calculated tax for the 2025.

Answers

  • MatthewD
    MatthewD FreeTaxUSA Admin, FreeTaxUSA Agent Posts: 930 image
    Hello,

    We don't have a recommendation for entering a 1099-R without the original 1099-R. We recommend that you wait until next year to receive the Form 1099-R with the excess distribution and then amend your return.

    Removing the excess contribution is very important to do to avoid penalties.
  • MMA
    MMA Member Posts: 2 Newcomer

    What should

    What should I be showing on Deduction → IRA Contribution screens?


    If I am showing the $7000 contribution amount and $5900, its resulting in additional taxes. How do I show the amounts ?

    Should I show $7000 as contribution amount and same $7000 as the amount withdrawn ?

    Or

    I should not be showing any contribution and withdrawn amount as I am doing it in the same year before filing deadline.