Never had penalized ira contributions before...

[schirallicpa]

Last year my client had paid into a Roth which was over amount allowed and was charged 450 bucks (7500 x 6%).

This was actually the first time that I had a client that kept the Roth IRA contribution and paid the tax.  

But I didn't expect to see it again on the 2024 return!  What the heck.  Carry forward the 7500 and hit me again?  I've never had to look at this before.  Just when I thought "I knew everything."

[Lion EA]

How much of a Roth contribution did he qualify for in 2024?

[Sara EA]

The 6% penalty applies each year the excess contribution remains in the account.  The excess and associated earnings must be distributed before the penalty disappears.

[Lion EA]

Can he use up the old excess in 2025 by not contributing that amount this year? Or, does he not qualify to make any Roth contributions this year?