To begin, my wife and I live overseas. This means that our extended deadline to file taxes is June 15. We need to do a withdrawal of excess contribution, and I don’t think we’re able to recharacterize it or anything, since our problem is too low of income rather than too high.

In 2021, my wife made an excess contribution of $2,428 to her Roth IRA. We had joint self-employment income of around $3,472 (which was our AGI) and she contributed $5,900 I believe. I didn’t contribute anything to a Roth IRA. We filed married filing jointly.

In 2022, she made an excess contribution of $6,000 (we weren’t aware that you couldn’t make contributions with money deducted using Foreign Earned Income Exclusion, and we didn’t have other income).

For 2023, she has contributed $400 so far, but we’ve stopped contributions and will get those excess+gains (or minus losses) removed.

I’ve found a lot of information about what to do but not a lot about how to do it and file our taxes correctly. I think:

1. For our excess contribution in 2021: we remove the excess contributions (not including gains/losses), and do a 2021 amended return with form 5329 with the excess contributions that were withdrawn. Then, we file form 5329 with our taxes for 2022 (before the extended deadline), and pay the 6% for both 2021 and 2022. If I’m correct I think we’ll need to submit the amended 2021 tax return before filing the current 2022 tax return.

NOTE: The excess contributions in 2021 were a prior-year contribution that happened in January 2022 if I remember correctly. We made contributions that were eligible throughout the year, then added more in January of 2022. Our contribution for 2021 and 2022 happened around the same time. Does that change anything? Could those excess contributions for 2021 possibly count as a 2022 excess contribution rather than 2021 and save us that 6% fee (since the money was added in 2022)?

2. For our excess contribution in 2022: we remove the excess contributions (the account had a loss, so we’d subtract the losses from the 6k we over-contributed and remove whatever that number is) and we put the total amount of the withdrawal on our 1040 line 4a (and don’t think we put the losses anywhere). And we include a statement explaining the withdrawal (I’d mention the loss here I suppose). Since it would happen before our extension and we had losses, we don’t pay anything on this. And I don’t think we need to file form 5329 for this excess (but will need to file form 5329 for the 2021 excess with this return). Is that all correct?

3. For excess contribution in 2023: I think we can basically follow the same structure as 2022 excess, but we’ll file it next year. I suppose we can do the Net Income Attributable calculation in the same way as for the 2022 excess, and can remove them at the same time? Is that when I file form 8606, or do I need to file that this year? Here, I think I need to file form 5329 one more time to show that the excess is removed and no more fees are due.

My questions:

I know we need our broker to file the ‘return of excess contribution plus gains (or minus losses)’ to the IRS for us to withdraw the 2022 and 2023 excess contributions. But for the 2021 excess, do we need to file the same ‘return of excess contribution’ form or can we do a regular withdrawal?

Since our combined AGI (from self-employment income) was $3,472 for 2021 and I didn’t contribute to an IRA, my wife was able to contribute up to $3,472 to her IRA, right?

I suppose the expat filing extension applies in this case to removing Roth IRA Excess contributions? As it says you need to remove all excess contributions before the tax deadline including extensions in order for the contributions to be treated as if never contributed, and so avoid the 6% fee (in Instructions for form 8606)

Do we need to file from 8606 for our 2021 or 2022 excess contributions? If so, for what year? Do we just file it next year (for 2023 taxes) as we’ll be making a withdrawal this year?

What about form 1099-R? I think after getting the excess contributions withdrawn we’ll receive that in January of next year. Do I need to file that for this year, or next year, or do an amended return? Or what?

Are there any other forms to file for this?