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normwade
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I have discovered an error that repeats each year, how do i resolve

I have found an error in the additional tax on excess contributions to Roth IRA's. I have made no contributions to any Roth IRA for several years, however my return shows a prior year excess contribution for which I am being taxed
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I have discovered an error that repeats each year, how do i resolve

If you indicated in a previous year that you had a Roth contribution that was in excess then that will carry year to year and apply the 6% yearly penalty until the excess is removed.   If that is correct and you *have not* removed the excess, then the penalty is probably correct since the 6% tax penalty on an excess contribution repeats each year until the excess is removed.

If there never was an excess or it has already been removed then go to the IRA contribution section, say that you have a Roth contribution, do not enter an amount for 2016 and step through the interview until it asks if you had prior year excess contributions - answer "yes" and the carry-over excess that you get the penalty for should appear.   Enter a 0 in that box and continue to the end of the interview.  That should remove the excess and the associated 5329 form that reports the penalty.

(If you improperly reported a penalty on 5329 forms in previous years and paid the penalty when there was actually no excess then you might need to amend those years to recover that tax.)


Enter IRA contributions here:
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),
Retirement & Investments,
Traditional & Roth IRA contribution.

OR  Use the "Tools" menu  (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

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1 Reply

I have discovered an error that repeats each year, how do i resolve

If you indicated in a previous year that you had a Roth contribution that was in excess then that will carry year to year and apply the 6% yearly penalty until the excess is removed.   If that is correct and you *have not* removed the excess, then the penalty is probably correct since the 6% tax penalty on an excess contribution repeats each year until the excess is removed.

If there never was an excess or it has already been removed then go to the IRA contribution section, say that you have a Roth contribution, do not enter an amount for 2016 and step through the interview until it asks if you had prior year excess contributions - answer "yes" and the carry-over excess that you get the penalty for should appear.   Enter a 0 in that box and continue to the end of the interview.  That should remove the excess and the associated 5329 form that reports the penalty.

(If you improperly reported a penalty on 5329 forms in previous years and paid the penalty when there was actually no excess then you might need to amend those years to recover that tax.)


Enter IRA contributions here:
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),
Retirement & Investments,
Traditional & Roth IRA contribution.

OR  Use the "Tools" menu  (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
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