My spouse and I file married filing seperate returns due to the state of Ohio's high tax. We both have invested 2,0000.00 to a Roth Ira for yrs 1998,99,00(we thought we would be able to file jointly). I understand that the 2,000.00 is considered excess contributions since our AGI for both is over 10,000. But I don't understand why we continue to be taxed for the previous yrs excess contributions instead of just the yr you are filing. Any insight would be helpful. Thank You.

The law is that you are penalized 6% PER YEAR, from the year you make the excess contribution until the year you remove it. The penalty is not a "fee" to keep the money in a Roth; it's a PENALTY designed to get you to correct an improper behavior.

You should know that you also have to remove the applicable income on the contribution, and the income is taxed and subject to the 10% early withdrawal penalty. You also will never be eligible to take tax free income from the Roth until you correct the excess contributions.