Not eligible for roth contribution after marriage

[AprilWang]

@DanaB27 Sorry I ran into issues when following these steps for my 2023 return:

On your 2022 return you will enter the Roth IRA contribution and TurboTax will automatically calculate the excess contribution. On the 2023 return you will follow these steps:

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. On the "Do you have any Excess Roth Contributions" answer "Yes"
5. On the "Enter Excess Contributions" screen enter the total excess contribution from 2022.

I followed step 1, the returned contents are Q&A's, starting with "What's included in PLUS Help & Support", but I don't find “Jump to IRA contributions" to click on.  Not sure if it matters that I am using desktop version.

Thank you.

[AprilWang]

Hi @DanaB27 ,could I possibly get your help on this?  Thank you!

[DanaB27]

Please follow these steps in TurboTax Desktop:

1. Open your return
2. Click “Deductions &Credits” on the top
3. Click "I'll choose what to work on"
4. Scroll down to “Traditional and Roth IRA Contributions” and click “Start”
5. Continue until the "Do you have any Excess Roth Contributions" screen and answer "Yes"
6. On the "Enter Excess Contributions" screen enter the total excess contribution from 2022. 

@AprilWang 

[AprilWang]

Hi @DanaB27 ,

Thank you for your timely response.  I entered the excess contribution from 2022 in deduction section and it worked.  Now form 5329-T line 24 is showing the excess contribution, with smart worksheet showing 12/31/23 Roth IRA value (which is much smaller), and line 25 additional tax is based on the smaller of 2022 excess contribution and 12/31/23 value.  So thank you.

Before your response, anticipating a 2024 1099-R to be issued, I already entered the 2022 excess contribution in the Wage and Income section, IRA...Withdraws (1099-R), do I need that or should I delete it?  Thank you so much! 

[DanaB27]

Yes, you will delete the 2024 Form 1099-R that you entered in the retirement section:

1. Click "Federal Taxes" on the top and select "Wages & Income"
2. Click "I'll choose what to work on"
3. Scroll down and click "Update" next to "IRA, 401(k), Pension Plan (1099-R)" 
4. On the "You 1099-R Entries" screen delete the 1099-R

@AprilWang 

[AprilWang]

Hi @DanaB27, thank you so much!  I followed the same steps and made amendments to 2022 return, i.e. entering the excess contribution in the Deduction section and letting turbo tax calculate the penalty through form 5329.

For 2024, I would follow the same steps one more time and let TT prepare another form 5329 (penalty calculated should be 0 by then).  Is this necessary?    

If the above 2 are correct, I would also like to confirm, correcting Roth IRA contribution doesn't need to involve 1099-R and Wage/Income section at all, unless there's withheld tax on earnings  involved.   

When I requested the withdrawal, I did not understand that the withholding is on earnings and had my fin. institution withhold $1.15 tax (even though the account had net loss).  Because of the $1.15 tax, when I get my 2024 1099-R, I would need to enter the 1099-R in Wage/Income/IRA section for 2024 return, so that the withheld tax get included in taxable income?  Is this right?  Thank you so much!

[AprilWang]

Sorry @DanaB27 , I meant to say "include the $1.15 in the total tax already paid".

[DanaB27]

Yes, for 2024 you would enter the excess contribution one more time and let TurboTax prepare another form 5329 (penalty calculated should be 0 by then). This is necessary to show the IRS that the excess contribution was resolved.

You would enter the 2024 Form 1099-R with code J for the regular Roth IRA distribution (without earnings) on the 2024 return.

1. Click "Federal Taxes" on the top and select "Wages & Income"
2. Click "I'll choose what to work on"
3. Scroll down and click "Start" next to "IRA, 401(k), Pension Plan (1099-R)" 
4. Enter all your 1099-Rs
5. Click "Continue" on the "Review your 1099-R info" screen
6. Answer all the questions and make sure you enter the net contributions prior to 2024 on the "Enter Prior Year Roth IRA Contributions" screen (include the excess contribution)
7. On the "Do you have any Excess Roth Contributions" answer "Yes"
8. On the "Enter Excess Contributions" screen enter the total excess contribution from 2022.

@AprilWang 

[AprilWang]

Hi @DanaB27 thanks for your response.  To clarify for 2024, I plan to repeat steps for 2022 and 2023, i.e. to enter 2022 excess contribution in Deduction section and form 5329 would show the excess contribution was resolved.

The 8 steps you listed, done in the Wage/Income section, would that be on top of what I do above, just so that it gets reported, as a necessary requirement with 1099-R issued?  Or would it be in lieu of the above, so to show the excess contribution was resolved?  Thanks for helping me to navigate the complexities here.

[DanaB27]

You can enter the excess contribution from prior years either under IRA contributions in the Deduction & Credit section or when you enter your retirement distribution in the Wages/Income section on your 2024 return.

@AprilWang 

[AprilWang]

Thanks @DanaB27 , but if I entered it in retirement distribution in the Wages/Income section on your 2024 return, it would also takes care of the $1.15 withheld tax, which I need to report, or is the $1.15 negligible, which I should ignore?  Sorry I am being extra careful here, to make sure I don't miss an obligation.

[DanaB27]

Yes, when you enter the Form 1099-R on your 2024 return the withheld federal taxes  from box 4 will carry over to line 25b of Form 1040.

[AprilWang]

Thank you, @DanaB27 , I greatly appreciate your patience and help.  Have a wonderful evening!