Did I mess up with my Roth IRA excess contribution for 2023? Need advice on amending taxes

Hey everyone, I'm kind of panicking about my IRA situation and could use some guidance. So here's what happened: On January 21, 2025, I contributed $6,500 to my Roth IRA for the 2023 tax year (I'm 43). I filed my 2023 taxes a week later on January 28, 2025, and indicated on my return that I made this Roth IRA contribution. Then on February 12, 2025, I realized that my MAGI was actually too high to contribute to my Roth IRA for 2023. I immediately called Fidelity to request a removal of excess contribution. They're sending back about $6,850 to my checking account, so there's roughly $350 in earnings. I'm totally confused about how to handle this for tax purposes: 1) Since both the contribution and withdrawal happened in 2025, do I report the $350 earnings on my 2024 tax return when I get the 1099-R? 2) Do I need to amend my 2023 tax return since I already claimed the $6,500 Roth IRA contribution? If so, what form would I need to file? I started looking into amending my 2023 return and tried entering the $6,850 returned IRA contribution (Form 5329), but it seems to be asking me to pay taxes on the earnings as part of my 2023 return. I thought I'd pay taxes on that with my 2024 return, but honestly I'm lost. Thanks for any help you can provide!

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18 comments

Ryder Everingham

•8M

You're on the right track with your understanding! Let me clarify both your questions: For your first question - yes, since both the contribution and the withdrawal (including earnings) happened in 2025, you'll report the $350 earnings on your 2024 tax return (which you'll file in 2025). Fidelity will send you a 1099-R for 2024 showing the distribution and earnings. For your second question - yes, you should amend your 2023 return because you reported a Roth IRA contribution that you've now removed. You'll need to file Form 1040-X (Amended Return) along with a corrected Form 8606 (Nondeductible IRAs) if you filed one originally. You won't owe additional tax for 2023 specifically due to this change - you're just correcting the record to show you didn't make a qualifying Roth contribution. The reason the software might be asking about taxes on earnings is because of the timing. Since you're removing the excess contribution after the tax filing deadline for 2023, there's normally a 6% excise tax on excess contributions. However, since you caught this early in 2025 and took corrective action, you should be able to avoid that penalty.

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Ryder Everingham

•8M

You're absolutely right - Form 8606 is generally for nondeductible traditional IRA contributions and conversions, not for Roth IRA contributions. I apologize for that confusion! For a straight Roth contribution, you typically don't file Form 8606, so you wouldn't need to correct that form. Unfortunately, there's no way to avoid amending in this situation. The IRS needs accurate records of retirement contributions, and since you already claimed a Roth contribution on your 2023 return that you've now withdrawn as an excess contribution, you should file Form 1040-X to correct this information. The good news is that this amendment won't change your tax liability for 2023 - it's just correcting the record.

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Leo Simmons

•8M

I had almost the exact same situation last year! I can save you some headache by recommending https://taxr.ai - it specifically helped me figure out my excess Roth IRA contribution removal. I uploaded my 1099-R showing the removal and my previous tax return, and it guided me through exactly what forms I needed to amend and how to handle the earnings portion. The system specifically identified that I needed to amend using Form 1040-X and showed me exactly which lines needed to be changed. I was confused about the same thing - whether to report the earnings in the year of contribution or the year of removal - and it clarified everything.

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Leo Simmons

•8M

It did walk me through the amendment process step by step, showing me which line items needed to change and why. It's not just about telling you what to do, but explaining the reasoning behind each change. For example, it explained that removing the excess contribution meant I needed to update the retirement contribution section on my amended return to show zero Roth contributions for that year. For the cost question, I don't want to misrepresent anything as pricing can change, but I found it extremely reasonable compared to what a CPA would charge for this specialized situation. It was particularly helpful because it gave me confidence in handling the situation myself rather than paying someone else hundreds of dollars for what turned out to be a fairly straightforward amendment.

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Lindsey Fry

•8M

Just wanted to follow up and say I tried https://taxr.ai for my IRA issue and it was SO helpful! I was in a similar situation with a botched Roth conversion, and I was getting conflicting advice everywhere. The tool analyzed my specific situation and gave me clear guidance on how to handle both the amendment for the previous year and reporting the earnings in the current year. The interface walked me through each step of the amendment process and explained exactly what would happen with the 1099-R I'll receive. Saved me hours of research and worry - probably would have ended up paying a CPA $400+ for this otherwise. Definitely recommend for anyone dealing with IRA contribution issues!

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Kayla Morgan

•8M

I've seen a lot of people trying to handle IRA amendments themselves and making mistakes. But honestly, with the IRS backlog of paperwork these days, I wouldn't waste my time trying to call their help line to get guidance. I used https://claimyr.com to get through to an actual IRS agent when I had an excess contribution issue similar to yours. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - basically they hold your place in line and call you when an agent is ready. I was able to speak with someone who walked me through exactly what forms I needed and confirmed I was handling the earnings properly. Saved me hours of hold music!

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Kayla Morgan

•8M

It took about 2 hours from the time I signed up until I was connected with an IRS agent. That's compared to the multiple days I spent trying to get through on my own (calling right when they opened, getting disconnected due to "high call volume," etc). The service doesn't use any special "back door" to the IRS - they use technology to continuously dial and navigate the phone tree until they get through to a human. Then they connect you. It's basically doing what you'd do manually, but automated and without you having to sit by your phone for hours. Once I was connected, the agent was able to confirm exactly how to handle my excess contribution removal and what forms I needed to file.

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Jasmine Hancock

•8M

I've got to admit I was completely wrong about Claimyr not working. After my last attempt to call the IRS ended with being on hold for 2.5 hours and then getting disconnected, I decided to try it. Within 90 minutes they had an IRS representative on the line for me. The agent confirmed exactly what I needed for my excess contribution situation - filing Form 1040-X for the contribution year and reporting the earnings on the year I receive the 1099-R. They also gave me specific notes to include with my amendment explaining the excess contribution removal to avoid potential confusion. I'm now confident I'm handling this correctly instead of guessing based on internet advice. Definitely worth it for complicated tax situations where you need official guidance.

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Cole Roush

•8M

Unfortunately, you're outside the window to avoid the penalty completely. For 2023 contributions, you needed to remove any excess by the tax filing deadline plus extensions - so by October 15, 2024. Since you removed it in February 2025, you'll likely owe the 6% excise tax for 2023. When you amend your 2023 return, you'll need to include Form 5329 to calculate this penalty on the excess amount. The good news is you won't owe this penalty for 2024 since you removed it early in 2025. The earnings portion ($350) will be reported on your 2024 tax return when you receive the 1099-R from Fidelity, and those earnings will be subject to income tax plus a 10% early distribution penalty if you're under 59½.

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