Excess Roth IRA Contribution in 2021 and 2022

[ww_94]

@fanfare Do state taxes need to be amended as well as part of excess IRA Contribution (I'm in CA)?

I tried to amend my 2021 Tax Return on Turbotax Desktop and needed to complete the CA State Return as well (It ended up being a $0 balance/refund for state). 

I also got an error saying that the 2021 filing was closed so I will need to mail in amended return. When I download all the forms for federal I get a 1040-X (Amended Return), 1040, Schedule 2, Schedule B, 5329, and a 8995 Form. Should I be mailing all of them? 

I also have a form for a certificate of electronic filing with a date back in 2022 when the tax return was submitted. I had gotten an error in TurboTax when I had tried to set the amend date of 2024. Is this fine? 

Thank you! 

[fanfare]

How to file:Do not include your old 1040 nor your revised 1040 because the Form 1040-X reflects any changes there and becomes your new tax return.

Include any new/corrected document only if it shows federal tax withheld, and include in order only those Sequence Numbered tax forms and Schedules that changed or were added due to your amendment.
Attachment Sequence Number is on all the forms and Schedules that come after 1040.

If you are using TurboTax you have to do this by visual comparison. The program won't break out those pages for you. 
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If any forms specify an attachment, put all those attachments at the end in the same order as the forms they go with.
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Mail to the address shown for your location in the most recent Instructions for Form 1040-X.

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If your CA tax did not change you don't have to amend.

@ww_94 

[ww_94]

I'm actually unsure about the CA Tax Return. It shows 0 because I didn't end up explicitly changing anything. Do you need to amend the State Tax Return for Excess Roth IRA contributions?  I couldn't find a clear answer or source online. 

[CatinaT1]

Like fanfare said, If your CA tax did not change you don't have to amend.

[ww_94]

@CatinaT1 It only didn't change because I didn't know if there were any adjustments needed to be made to the CA tax return for excess Roth IRA contributions. Is there a section in the CA state tax return that accounts for excess Roth IRA contributions just like there is in the federal tax return? I was not able to find it

[DanaB27]

You do not need to amend your CA tax return.

"Also, California does not have taxes similar to the tax on excess contributions to traditional IRAs, Roth IRAs, Coverdell ESAs, ABLE accounts, Archer MSAs, or tax on excess accumulation in qualified retirement plans." (2021 Instructions for Form FTB 3805P)

[3D-Q]

@fanfare   

@fanfare  Have similar situation with ww_24 regarding excess ROTH contribution made in 2021.   Have been following on your responses which have been very helpful – thank you!

My case: 

1. 2021 1040 was prepared by an independent practitioner.  No 5329 was reported.  
2. Haven't filed 2023 tax return yet and using Premier edition of TT
3. Plan to request withdrawal of 2021 excess ROTH contribution by Apr-15, 2024 (tax due date)
4. Have satisfied the 5-year rule for ROTH account (opened in 2019) if this matters.

Questions: 

1. How is Form 5329 created to accompany 2023 1040?   (Planning to manually file for amended returns for 2021 and 2022 and attach the new Schedule 2 and Form 5329).  
2. This 2024 withdrawal will be reported on Form 1099-R in 2025.  Do we need to report this on 2024-1040?  Will the 2021 excess contribution resolve itself with the amended returns and payment of the 6%/year penalty?

Thank you so much!

[fanfare]

The "tax due date" for a 2021 excess contribution is Tax Day 2022.

That option is no longer available to you.

Your excess has been in the Roth IRA for three full years going on four.

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After tax due date including extensions: you distribute the excess amount being carried forward on 5329,
(or offset it with currently allowed contribution) .
An amended return(s) will be needed supplying Form 5329 since there is a 6% penalty per year on excess contributions .
Any earnings stay in the Roth account.

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If you distribute the excess now, you willl resolve the issue on your 2024 tax return.

@3D-Q 

[fanfare]

@3D-Q 

 I see from your post you are planning to do as I stated above.

Yes you will have to file Form 5329 with your 2024 tax return.