How to handle excess Roth IRA contribution for 2024 after filing taxes - Return before 4/15/25 deadline

You've actually done everything right so far! When you return excess Roth IRA contributions before the tax filing deadline (including extensions), you've avoided the 6% excess contribution penalty. Here's what happens next: The earnings portion of what you removed will be taxable for 2024 (the year you made the contribution), but the withholding will be credited to your 2025 taxes (the year it was actually withheld). This creates a bit of a timing mismatch. For your questions: 1. You should amend your 2024 return once you receive the 1099-R (likely in January 2026). While you could create a "dummy" form now, I don't recommend it. The financial institution might code Box 7 differently than you expect, and you want to make sure everything matches their official reporting. 2. You don't need Form 5329 for the excess contribution penalty (Part IV) since you corrected before the deadline. However, you do need to report the early distribution and claim the exception (Part I) using code 21 - Return of excess contributions. This exempts you from the 10% penalty on the earnings. 3. Wait for the official 1099-R. Financial institutions vary in how they code these transactions, and you want to ensure your amendment matches their reporting to avoid IRS notices. The 1099-R will report the distribution as occurring in 2025, but you'll include the taxable earnings on your amended 2024 return. The 10% withholding complicates things slightly, but not terribly. The withholding will be reported on your 2025 return, but the income will be on your amended 2024 return.

Just wanted to share - I used taxr.ai to help me navigate a similar excess contribution issue last year. I uploaded my 5498 and account statements, and they gave me step-by-step instructions for handling the return of excess and exactly which forms needed to be filed. The guidance was super specific to my situation, unlike the general advice I found online that left me confused. I made the mistake of contributing to both a Roth and Traditional IRA in the same year without realizing I was over the combined limit. The site is https://taxr.ai and saved me hours of research plus potentially costly mistakes with the IRS.

I was totally skeptical about tax analysis tools until I tried taxr.ai for my own excess contribution mess. I used it after getting conflicting advice from two different CPAs about whether I needed to file Form 5329 for my situation. Uploaded my tax docs and got detailed instructions about returning the excess contribution properly before the deadline. They explained that I needed to specify to my brokerage that I wanted a "return of excess contributions" and not just a normal withdrawal. Made a huge difference because the 1099-R coding was completely different! They also clarified exactly how to handle the withholding timing issue (income in one year, withholding credit in another). Ended up saving me from a 6% penalty that would have continued each year until corrected.

If you're struggling to get hold of the IRS to clarify this situation, I highly recommend using Claimyr. I had a similar excess contribution issue last year but with a Traditional IRA, and I needed to speak with someone at the IRS to confirm how to handle the return of excess contribution. After wasting hours on hold, I used https://claimyr.com and they got me connected to an IRS agent in about 20 minutes. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that I needed to amend my return for the year of the contribution, not the year of the correction, which is exactly what you're trying to figure out. Saved me from making a costly mistake!

I have to admit I was wrong about Claimyr. After posting that skeptical comment, I decided to try it for my own IRS issue (was fighting an erroneous CP2000 notice for months). Got connected to an IRS agent in about 25 minutes, which was shocking after my previous attempts of waiting 2+ hours only to get disconnected. The agent confirmed I needed to use Form 8275 with my response to properly explain my situation, which none of my previous research had turned up. Would never have resolved this without actually speaking to someone, and I had basically given up hope of getting through. For anyone dealing with complex IRS issues like return of excess contributions where the rules are confusing, being able to actually talk to someone makes all the difference.

Slightly different take here - I had almost this exact situation last year. My approach was to wait for the official 1099-R in January (which showed code P for principal, J for early distribution exception). My accountant suggested doing the amendment right away in April instead of waiting for the 1099-R. We did it using a "placeholder" 1099-R and assumed code PJ. When the real one came, it matched what we had put, so no issues. The main reason to amend promptly was to get a refund of the 6% excise tax I had originally paid on Form 5329 (I originally didn't realize I could correct it before the deadline). Sounds like you didn't file 5329 originally, so there's less urgency. The earnings were tiny in my case too (like $120), so the tax impact was minimal. I say wait for the 1099-R unless you need to amend for other reasons.

Just as a data point, I did a return of excess for 2023 in March 2024 because my income ended up too high. My 1099-R had code 8 (excess contributions) plus code J (distribution exception applies). One weird thing - even though I did the return of excess in March 2024, my financial institution didn't send the 1099-R until January 2025. So definitely expect a lag before getting the official form. If your earnings were only $250, your total tax bill might be $50-80 depending on your bracket. Since that's a relatively small amount, there's probably no harm in waiting for the official 1099-R before amending. If it were thousands in earnings, there might be underpayment penalty concerns.

I went through this exact situation two years ago - excess Roth contribution due to unexpected income bump, corrected before the deadline. Here's what I learned: You're absolutely right to wait for the official 1099-R. The timing mismatch with withholding is confusing but not uncommon. The earnings get taxed in 2024 (year of contribution), but your withholding credit applies to 2025 (year withheld). It's awkward but legal. When you do get the 1099-R, it will likely have code P (for the principal/contribution amount) and either J or 8J in Box 7. The "8" indicates excess contribution return, and "J" indicates early distribution exception applies (no 10% penalty). For Form 5329, you'll need Part I to claim the exception for the early distribution penalty (code 21), but you won't need Part IV since you corrected the excess before the deadline. This is important - many people think they don't need 5329 at all, but you do need it to avoid the 10% penalty on earnings. My advice: wait for the 1099-R, then amend with Form 1040X including the 1099-R and Form 5329. The small tax amount ($60-75 probably) isn't worth the hassle of estimating forms now. Your tax preparer will appreciate having the official documents to work with. The withholding timing is just one of those quirky tax situations - you'll essentially get a small refund in 2025 from the "overpayment" of withholding relative to the actual 2025 tax you owe.