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Excess Roth IRA contribution withdrawn before the tax year ended

Contributed by: Henry, FreeTaxUSA Agent, Tax Pro

December calendar beside a piggy bank and stacked coins, representing withdrawing an excess Roth IRA contribution before the tax year ended.

If you discover an excess Roth IRA contribution for a given year before the end of that tax year, the tax reporting is straightforward.

: Illustration showing two events occurring in the same current tax year: Roth IRA Contribution — made a Roth IRA contribution for the tax year; and Excess Withdrawal — withdrew the excess contribution within the same tax year.

Consider James’s situation: In February 2025, he makes a Roth IRA contribution for 2025. He later realizes he contributed too much and withdraws the excess contribution, along with the related earnings, before December 31, 2025. Because he withdraws the excess plus earnings before the end of the year, he’s not subject to the 6% excise tax.

In January 2026, James receives a 2025 Form 1099-R reporting the distribution. Box 7 contains codes 8 and J. Code 8 indicates a return of excess contributions plus any taxable earnings reportable in the current year — 2025. Code J indicates an early distribution from a Roth IRA.

James reports the Form 1099-R information on his 2025 tax return. The gross distribution is reported on Form 1040, Line 4a, and the taxable earnings are reported on Line 4b. Although Code J identifies the distribution as an early Roth IRA distribution, this corrective distribution isn’t subject to the 10% additional tax on early distributions.

How to report an excess Roth IRA contribution and withdrawal in FreeTaxUSA

STEP 1: Report your Roth IRA contributions

You’ll report the Roth IRA contributions by following menu path: Deductions/Credits > Common Deductions/Credits > IRA Contributions.

Screenshot of FreeTaxUSA screen titled "Did you contribute to an IRA?" A red arrow points to the "Yes" answer, selected for "Did James or Quincy make any traditional or Roth IRA contributions during 2025?" Below, "No" is selected for "Did James or Quincy have any excess IRA contributions in 2024?

Enter the total Roth IRA contributions made for the current tax year:

Screenshot of FreeTaxUSA screen titled "Enter your IRA contribution amounts," showing James's Contributions. A red box and arrow highlight the field for "Enter any Roth IRA contributions James made during 2025," filled in with $7,000. The field for traditional IRA contributions is left blank.

Based on the income and filing status information you’ve already entered, the software will calculate whether you have excess Roth IRA contributions. Since you withdrew the excess by the tax filing deadline (including extensions), answer Yes when asked if you withdrew any Roth IRA contributions. Then enter the amount of the excess contribution withdrawn. These entries let the software know the 6% excise tax doesn’t apply to the amount withdrawn.

💡 Note: Don’t include any earnings withdrawn, and don’t exclude any losses, when reporting the withdrawn contribution amount. For example, if you contributed $7,000 and lost $100 on the investment, you’d only have $6,900 left to withdraw – but you’d still enter $7,000 as the withdrawn contribution amount, not $6,900.

Screenshot of FreeTaxUSA screen titled “Did you withdraw any contributions?” screen. It shows James has $7,000 of excess Roth IRA contributions because his Roth IRA limit is $0 due to high MAGI. A red box highlights the question “Did James withdraw any Roth IRA contributions by the tax filing due date?” answered “Yes.” A red arrow points to the amount field below, where $7,000 has been entered as the Roth IRA contributions withdrawn.

STEP 2: Report your Roth IRA distributions

Since you made and withdrew the contributions during the same tax year, you’ll generally receive Form 1099-R early the following year, before filing that year’s tax return. To enter Form 1099-R, follow menu path: Income > Common Income > Retirement Income (1099-R).

Screenshot of FreeTaxUSA screen titled “Your Retirement Income (Form 1099-R)” screen, asking whether you need to enter any 1099-R forms for IRA, 401(k), or pension distributions/rollovers. A red arrow points to the “Add a 1099-R for James” button, highlighting it next to the “Add a 1099-R for Quincy” button.

Conclusion

You can correct an excess Roth IRA contribution without owing the 6% excise tax when you withdraw the excess in the same year as the contribution. Just remember that any related earnings still need to be reported in the correct tax year.

Keep copies of your withdrawal request, the account administrator’s confirmation of the transaction, and any Form 1099-R you receive. These records can help support the tax year in which you reported the distribution and the amount of earnings you included on your return.