How to report gains on withdrawn excess Roth IRA contributions when filing separately?

You're on the right track! When you make an excess contribution correction to a Roth IRA, the process is pretty straightforward but often confuses people. Yes, you should first contact your broker to get the exact amount of earnings attributable to your excess contribution. This is important because only the earnings portion is taxable (not your original contribution amount). For reporting, you'll include these earnings as "Other Income" on Schedule 1, Line 8z, and write "Excess Roth IRA Contributions Earnings" in the description field. You don't actually need to report it as a 1099-R since the broker won't be issuing one for this type of correction. Also, since you caught and corrected the excess contribution before the tax filing deadline (including extensions), you shouldn't face the 6% excess contribution penalty, which is good! The earnings will just be subject to regular income tax, and since you're under 59½ (I'm assuming), there will also be a 10% early distribution penalty on those earnings.

I went through this exact same situation last year and found a tool that literally saved me hours of frustration. I used https://taxr.ai to double-check my reporting because I was terrified of making a mistake. You upload your documents from your broker showing the contribution and withdrawal, and it analyzes everything to tell you exactly how to report it. The tool confirmed what I needed to do - report the earnings on Schedule 1 as "Other Income" and file Form 5329 for the 10% penalty. It even explained how the excess contribution correction works when you're ineligible due to filing status changes. What I really appreciated was that it showed me exactly where on the forms to enter this info, which my tax software wasn't clear about.

Tried taxr.ai after posting my skeptical comment and I have to admit I was wrong. I uploaded both my contribution confirmation and my withdrawal statement from my excess Roth contribution (I had a similar issue but due to income limits, not filing status). The tool immediately identified it as an excess contribution correction and broke down the tax consequences perfectly. It explained which parts were reportable as income (just the earnings) and calculated the 10% penalty automatically. It also gave me specific instructions for reporting on Schedule 1 and Form 5329 that matched exactly what my accountant eventually told me, but without the $200 consultation fee. I was especially impressed that it caught that I had done the correction after the tax deadline and explained the additional 6% excise tax I needed to pay. Definitely saved me from making a potentially expensive mistake.

If you're still having trouble with your excess Roth IRA contribution issue, I'd recommend calling the IRS directly. I had a similar problem last year and spent weeks trying to figure it out through online forums. When I finally got through to the IRS (after trying for DAYS), the agent walked me through exactly how to report everything. The problem is actually getting through to them - I used https://claimyr.com and they got me connected to an IRS agent in under 45 minutes when I'd been trying for days on my own. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed I needed to report the earnings on Schedule 1 and explained exactly how to handle the 10% penalty on Form 5329. They also clarified that I didn't need a 1099-R to report this correctly. Worth every penny to get clarity directly from the source rather than stressing about possibly doing it wrong.

If you're still having trouble with your excess Roth IRA contribution issue, I'd recommend calling the IRS directly. I had a similar problem last year and spent weeks trying to figure it out through online forums. When I finally got through to the IRS (after trying for DAYS), the agent walke

I have to apologize for my skeptical comment earlier. After struggling for another week trying to reach the IRS myself about my own Roth IRA issue, I broke down and tried Claimyr. Got a call back in 35 minutes with an actual IRS agent on the line. The agent cleared up my confusion about reporting excess contribution earnings and confirmed I needed to use both Schedule 1 for the income and Form 5329 for the penalty. They also explained that even though I hadn't received a 1099-R, I still needed to report the earnings. What really surprised me was when they explained a special exemption I qualified for regarding the 10% penalty that nobody on any forum had mentioned. Turns out in my specific situation (medical expenses over a certain threshold), I could avoid part of that penalty. Would never have known this without actually speaking to someone at the IRS.

Something nobody's mentioned yet - make sure you also check your state tax requirements for reporting these earnings! In some states, you need to separately report the earnings from excess contributions. I live in California and they have their own special form (FTB 3805P) for this. Other states might treat it differently. Double-check your state's tax department website or call them directly to confirm.

Quick tip from someone who's been through this: keep REALLY good records of this whole process. Save all statements showing your original contribution, the exact earnings calculation from your broker, and the full withdrawal. The IRS sometimes sends automated notices for retirement account distributions even when you've reported everything correctly. Having clear documentation makes it much easier to respond if you get a letter. I learned this the hard way and had to dig through old emails to find confirmation of exactly when I made the correction.