Reporting excess IRA Contribution

Forum|Forum|1 year ago
April 9, 2025
1 reply
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I made a contribution to my traditional IRA in March of 2025 for tax year 2024. Then when I did my taxes, I found that contribution was ineligible, so I had my IRA handler refund that (plus the small amount it made). Knowing I will get a 1099-R for that for the 2025 tax year, my question is since that contribution was returned, do I still report contribution on 2024's tax return?

Ask the Experts - Tax Due - April 2025

ThomasM125

You don't report the contribution in 2024, but you will need to report the distribution on your 2024 tax return. It won't be taxable accept for the interest income. You can do that when you file your 2024 tax return or wait until 2025 and file an amended return for 2024 to report the distribution and earnings on it. If you do it in 2024, you need to enter a substitute Form 1099-R in TurboTax.

To enter a refund of excess IRA contributions received in 2025 for 2024 contributions on your 2024 return, follow these steps:

Go to the personal income section of TurboTax
Find the Retirement Plans and Social Security menu option in the Wages and Income section of TurboTax
Start or Update IRA, 401(k), Pension Plan Withdrawals (1099-R)
Choose Add Another 1099-R
Choose I'll type it in myself
On the screen that says Tell Us Which 1099-R You Have choose I need to prepare a Substitute 1099-R
Enter the distribution amount in box 1 of the substitute 1099-R
Enter the earnings in box 2(a)
Enter code "P" in box 7 (And code "J" if from ROTH IRA)

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CallindrilAuthor

Thanks for the response, but a clarification if I may:

The initial contribution was made in 2025 (for 2024), and the returned money and "interest" generated for the 3 weeks it was in there in March of 2025 was returned in March of 2025....

Wouldn't this interest be handled in the 2025 tax year, since it was generated in 2025? When the IRA handler said a 1099-R would be mailed out for the 2025 year, I thought that meant the "interest" would be taxable in 2025?

MAK70

Timely corrections must be reported in the year of the withdrawal on IRS Form 1099-R. Any earnings will be included as taxable income in the year you made the excess or non-deductible contribution. [Edited 04/09/2025 | 11:15 am PST]

@Callindril