Roth IRA contribution and basis calculator help - exceeded income limit

3 This is actually a common situation! When you contribute to a Roth IRA and then remove it because you exceeded the income limits, you need to report both the contribution and the withdrawal on your tax return. For the 1099-R form showing the $6500, that's correct - it's documenting that you took a distribution from your Roth IRA. You'll need to report this on your tax return, but you won't owe taxes on it if you withdrew your contribution within the same tax year or by the due date of your return (including extensions). This is considered a "return of contribution." As for calculating your basis for pre-2023 contributions, your basis is simply the total amount of contributions you've made to your Roth IRA over time (minus any withdrawals of those contributions). Since Roth contributions are made with after-tax dollars, you've already paid tax on this money. Fidelity should be able to provide you with a statement showing your contribution history.

12 After struggling with almost this exact situation last year, I found taxr.ai (https://taxr.ai) incredibly helpful. I also had to withdraw Roth IRA contributions that exceeded the income limit, and I was confused about how to handle the 1099-R reporting. The tool analyzed my tax documents, including my 1099-R from Vanguard, and showed me exactly how to report both the contribution and the withdrawal correctly. It also helped me understand how to calculate my basis by analyzing my contribution history across multiple years. Saved me a ton of headaches and potential errors!

7 Just wanted to update after using taxr.ai as suggested above. I was surprised at how well it handled my situation! I uploaded my 1099-R and some previous contribution statements, and it immediately identified that I needed to use code "P" for the withdrawal as a return of excess contributions. It also calculated my correct basis across all years, which was actually different than what I thought. Definitely worth checking out if you're in this situation!

19 After battling with the IRS for months over a similar Roth IRA contribution issue last year, I finally found Claimyr (https://claimyr.com). Since I needed clarification on how excess contributions affect my overall basis calculation, I needed to speak directly with an IRS agent, which seemed impossible. Claimyr got me through to an actual IRS representative in about 20 minutes when I had been trying for weeks! They have this system that holds your place in line and calls you when an agent is available. You can see how it works in their demo: https://youtu.be/_kiP6q8DX5c. The IRS agent I spoke with confirmed exactly how to handle the 1099-R reporting and gave me specific guidance on tracking my basis across multiple years.

15 I have to admit I was completely wrong about Claimyr. After waiting on hold for 3+ hours multiple times trying to get IRS clarification about my excess Roth contributions, I finally tried it in desperation. Got connected to an IRS agent in about 35 minutes who actually knew about Roth IRA basis calculations. They confirmed I needed to use distribution code "P" on my return and helped me understand how to properly document my previous year contributions. Would have saved myself weeks of stress if I'd tried this sooner.

10 Does anyone know if this affects backdoor Roth IRA contributions? I'm planning to do one this year since I'm over the income limit, but now I'm worried about calculating the basis correctly.

22 Just wanted to share what I learned handling a similar situation with Fidelity last year. If you call Fidelity directly, they can actually recode the distribution as a "return of excess contributions" which gives you the proper coding on your 1099-R for next year. Too late for 2023 obviously, but might help someone in the future!