I filed my 2020 tax return. After filing (but prior to May 17), I made a 2020 contribution to my IRA ($7000) and my wife's IRA ($7000). I subsequently learned that these contribution are in excess of those allowed because of our earned income. How do I correct these contributions? Do I file an amended 2020 return even though the 2020 tax return does not reflect any Roth contributions?
If your Roth contributions are greater than your allowed amount for the year, and you haven't withdrawn the excess contributions by the due date of the return, you'll owe a 6% penalty tax on the excess contribution and you must complete Form 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts.
This penalty tax will be assessed every year on all excess contributions (including those from prior years) until you withdraw the excess contributions.
Any earnings (including interest or other income) on the withdrawn contributions should still be included in your gross income in the year withdrawn.
contact the administrator and inform them you want to withdraw your excess contributions. they will compute the amount of income withdrawn
you'll need to file an amended return for 2020 and include the form 5329
Once I reverse the contribution to the Roth IRAs, our 2020 tax return will be perfect (i.e., it states that there is 0 contribution to the Roth IRAs. Why would I need to file an amended return?
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