I filed 2022 tax return. TurboTax didn't add IRS form 5329 to it (so much for all cutesy "let's check that everything is right" animations). How do I amend and add 5329?

[DoninGA]

Why do you think a Form 5329 is needed?  Did you have an early distribution penalty because you were under the age of 59 1/2?

[dontaskmewhateve]

I know it is needed. I contributed more to Roth IRA than I made in 2022. I need to file it. I answered in TurboTax what my income is, how much I contributed to Roth, and TurboTax even calculated the excess amount for me (!!!!). However, it did not add the actual form 5329 to my return for some stupid reason. So I need to file an amended return. I was wondering if I can add this form online via TurboTax, or if I need to go to a different provider that knows how to file this form 5329. I am very irritated by cutesy animations, to be honest. I would prefer a correct return and no animations. But I ended up paying for a mistake that TurboTax made with omitting this form in my return. I can use some help how to fix this. Thanks.

[DanaB27]

To confirm, you entered the Roth IRA contribution for 2022 during the IRA contribution interview and got a warning that you made an excess contribution? Did you enter on the penalty screen that you removed the excess contribution by the due date? If yes, then TurboTax won't fill out Form 5329 part IV because it isn't needed.

Please be aware, you can avoid the 6% penalty if you withdraw:

• the excess contributions from your IRA by the due date of your individual income tax return (including extensions); and
• any income earned on the excess contribution.

If you do this then you will get a 2023 Form 1099-R  in 2024 with codes P and J for the withdrawal of excess contributions and earnings. This 1099-R will have to be included on your 2022 tax return and you have two options:  

• You can wait until you receive the 2023 Form 1099-R in 2024 and amend your 2022 return or
• You can report it now in your 2022 return and ignore the 1099-R when it comes unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding. Then you must enter the 2023 Form 1099-R into the 2023 tax return since the withholdings are reported in the year that the tax was withheld. The 2023 code P will not do anything to the 2023 tax return but the withholdings will be applied to 2023.

To create a Form 1099-R in your 2022 return please follow the steps below:

1. Login to your TurboTax Account 
2. Click on the "Search" on the top right and type “1099-R” 
3. Click on “Jump to 1099-R”
4. Answer "Yes" to "Did you get a 1099-R in 2022?"
5. Select "I'll type it in myself"
6. Box 1 enter total distribution (contribution plus earning)
7. Box 2a enter the earnings
8. Box 7 enter J and P
9. Click "Continue"
10. On the "Which year on Form 1099-R" screen say that this is a 2023 Form 1099-R.
11. Click "Continue" after all 1099-R are entered and answer all the questions.
12. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Another reason" if you are over 59 1/2 (if you are under 59 1/2 and removed the excess after December 29, 2022, then enter it next to "Corrective Distributions made on or after December 31, 2022"

Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2021" you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2022.

[fanfare]

you still have time to remove the excess before tax due date, including extensions.

even if it is after April 18, you can still  remove excess  and amend before Oct 15.

then your filed return will be correct (except for any earnings)

positive earnings are taxed, and penalized if you are under age 59 1/2

@dontaskmewhateve 

[dontaskmewhateve]

Thank you for your response. I am trying to determine what is the right path. You're saying 5329 is not needed. 1) The brokerage firm where I keep Roth IRA has this statement: "Withdrawal of excess contribution:

If you withdraw an excess contribution, you are required to file IRS Form 5329 with your tax return." I did withdraw the excess contribution. It's gone from the account already. I reported it in TurboTax that I withdrew it by the tax deadline.

2) IRS instructions for form 5329 https://www.irs.gov/pub/irs-pdf/i5329.pdf says that people have to file 5329 in this case: "The contributions for 2022 to your traditional IRAs, Roth IRAs, Coverdell ESAs, Archer MSAs, HSAs, or ABLE accounts exceed your maximum contribution limit".

It looks like I have to file 5329. I can't make TurboTax do it. How do I file it?

Thank you again for responding. I still don't know what is the right thing to do. I am a student, started a Roth thinking it is the right thing to do, and did not expect this tax filing headache.

[dontaskmewhateve]

I know I can remove excess contributions. Already did. My question is how to report it to IRS? I don't want to wait until October to file an amended return. I need to know sooner if I have to file an amended return, or if everything is OK now and I don't need to file amended return. And if I have to include 5329 - how to do it. TurboTax does not add 5329 to my original return. I just went through the whole "amend my return" flow in TT, confirmed that all my answers are correct, and 5329 is not there in the amended return either. 

So the question is now: if I put more into Roth in 2022 and then withdrew the excess - do I need to file 5329? TT does not add this form.

Thank you.

[DanaB27]

Yes, when you remove the excess contribution and earnings by the due date then the earnings will be taxable and subject to the 10% early withdrawal penalty if it was removed before December 29th, 2022 (on Form 5329 part I). I was referring to part IV (the 6% penalty calculation) isn't needed.

Since you have filed your 2022 tax return already it might be best to wait to amend your 2022 tax return until you receive the 2023 Form 1099-R with codes P and J in 2024.

But if you don’t want to wait and know the distribution amount and earnings then you can enter the 2023 Form 1099-R now with these steps:

1. Click on the "Search" on the top right and type “1099-R” 
2. Click on “Jump to 1099-R”
3. Answer "Yes" to "Did you get a 1099-R in 2022?"
4. Select "I'll type it in myself"
5. Box 1 enter total distribution (contribution plus earning)
6. Box 2a enter the earnings
7. Box 7 enter J and P
8. Click "Continue"
9. On the "Which year on Form 1099-R" screen say that this is a 2023 Form 1099-R.
10. Click "Continue" after all 1099-R are entered and answer all the questions.
11. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Another reason" if you are over 59 1/2 (if you are under 59 1/2 and removed the excess after December 29, 2022, then enter it next to "Corrective Distributions made on or after December 31, 2022"

Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2021" you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2022.

[Edited 4/3/2023 | 11:00 am PST]

@dontaskmewhateve 

[fanfare]

". I am trying to determine what is the right path."

It depends on whether the custodian returned to you more than you contributed.

The returned contribution is your money and not taxed.

anything over that is a withdrawal and is taxable on the return for the year of the contribution.

in that case, Form 5329 is required.

when you know the amount, you can include it on 1040 Line 4b.

there is a penalty if you are under age 59 1/2 for taking an early withdrawal.

@dontaskmewhateve 

[johnpkerby]

I am using TT Premium online with the same need to use form 5329. I am 76 and my financial firm did not withdraw my mandatory RMD which is required and place it in another account. As such I didn’t get a 1099-R. TT should recognize that because of my age and that requirement that a missing form1099-R should bring up further questions. It should also bring up form 5329. I have completed my return and have gone on to my state with no questions concerning my missing 1099-R. I have reviewed others instructions like go to forms but can not find a way to do that with your online version. Please instruct me on either a way to get to forms or pull up form 5329.

[DanaB27]

You will need to file Form 5329 and request a waiver of the penalty if you have reasonable cause. Please see Relief for Reasonable Cause for additional information.

If using the TurboTax Online version and have no 2022 Form 1099-R to file, you will have to prepare the 5329 manually.

Download Form 5329 from the IRS website and fill it out the same as below. Print and mail your return with the 5329 form and explanation attached as described in the 5329 instructions.

1. On line 52 enter the RMD amount that should have been taken.
2. On line 53 enter the amount of the RMD that was actually taken (probably zero if it was missed).
3. Enter “RC” and the amount of the shortfall you want waived in parentheses on the dotted line next to line 54. Subtract this amount from the total shortfall you figured without regard to the waiver, and enter the result on line 54.

The 2022 Form 5329 must be attached to your printed and mailed 2022 tax return and cannot be e-filed.

Please be aware that you can only use this method if you are requesting a waiver of the penalty and there is no taxable amount on Form 5329 form line 55 that must be transferred to Schedule 2 line 8.

If you want to switch to TurboTax Desktop:

1. Enter the forms mode and click on "Open Form" and type "5329".
2. Scroll down to Part IX line 52 and enter the RMD amount that should have been taken. On line 53 enter the amount of the RMD that was actually taken (probably zero if it was missed).
3. Then in the box right under line 53 "Waver of Tax Smart Worksheet" enter the same amount as line 52 (the RMD amount). 
4. Click the "Explanation" button and enter the reason for missing the RMD and your statement requesting a waiver.

@johnpkerby 

[JNRCROSBY]

I am completing return for 2022.

did not take full amount of RMD required. I withdrew additional amount yesterday and had taxes withheld. Understand I can add amounts on form 5329 but after trying many times to add 5329, I am not able to get Turbo tax to add form. went to search added add form 5329 but never would add a jump to link and typing jump to 5329 in search did not work either.

[DoninGA]

@JNRCROSBY 

Click on Federal Taxes (Personal using Home & Business)

Click on Other Tax Situations

Under Additional Tax Payments

On Extra tax on early retirement withdrawals, click on the start button

[kjacob]

I filed 2022 tax return. TurboTax didn't add IRS form 5329 to it (so much for all cutesy "let's check that everything is right" animations). How do I amend and add 5329?

[ThomasM125]

You can process the form 5329 in the TurboTax desktop software. If you are working online with TurboTax, you can use the Tax Tools option on your left menu bar while you are working on your return to then bring up Tools, which will have an option to Save your return to your computer so you don't need to start your online return over in the desktop version of TurboTax.

In the desktop TurboTax product, use the Forms menu option to bring up Form 5329. Scroll down to Part IX, line 52 and enter your required minimum distribution amount. Enter the amount of any RMD you took in line 53. Use the Waiver of Tax Smart Worksheet below line 53 to enter the amount you want to exclude from tax, and click on the Explain box to enter an explanation of why you missed making the distribution. You won't have to pay the tax for not taking your RMD on your return, pending a determination from the IRS later on.