Excess Roth Conversion – Reporting
New Client for me.
They contributed to a Roith IRA but income was too high. They are removing the excess contribution by 4/15. My question is how to report this on the tax return. Since they are removing the excess by 4/15, do I need to report anything on the tax return?
Permalink Submitted by Alan - IRA critic on Mon, 2023-03-13 18:02
Assuming this was a 2022 contribution that was made in 2022, they should request that the contribution be returned ASAP. If there are any gains on the returned contribution, the gain will be taxable income on the 2022 return. However, good chance there will be a loss rather than a gain and if so, all that needs to be included on the 2022 return is an explanatory statement regarding the date and amount of the excess contributions, and the date and amount received from the corrective distribution. A 1099R will not be issued for the removal of excess until January, 2024. There will be nothing to report on the 2023 return.