When preparing 2023 return in 2024 - the taxpayers had already contributed $7500 to IRA but only $2370 was allowed (has work retirement plan and high income). He withdrew excess before Apr15 2024.  Now I have 1099R-P showing Distribution of $5608, taxable of $978 for earnings on the excess.  This $978 increased his income thereby reducing amount allowed for IRA contribution from $2370 to $2000.  And a 10% penalty for early withdrawal on the $978 is being charged.

Does the taxpayer have to remove the $370......which of course will have earnings when a 1099R-P is issued which in turn will bring me right back to this same scenario.   

edit:  he had contributed $7000