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I received a CP2000 notice indicating my IRA contributions were disallowed for 2017 and I owe more federal tax. Why did the software allow this to happen?

 
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3 Replies

I received a CP2000 notice indicating my IRA contributions were disallowed for 2017 and I owe more federal tax. Why did the software allow this to happen?

The IRS CP2000 notice should tell you exactly what the IRS changed on your tax return to disallow the IRA contributions.  

Go to this IRS website for a CP2000 notice - https://www.irs.gov/individuals/understanding-your-cp2000-notice

Use the phone number on the notice to speak with an IRS agent if you have questions.

 

You can also use the TurboTax Audit Support Center for assistance in understanding the IRS notice you received - https://support.turbotax.intuit.com/irs-notice/audit-support/

I received a CP2000 notice indicating my IRA contributions were disallowed for 2017 and I owe more federal tax. Why did the software allow this to happen?

It could be that one (or more) of the questions was answered incorrectly (e.g., that you were covered by an employer retirement plan at work). 

 

Regardless, you can visit the TurboTax Audit Support Center for further assistance.

 

See https://support.turbotax.intuit.com/irs-notice/audit-support/

dmertz
Level 15

I received a CP2000 notice indicating my IRA contributions were disallowed for 2017 and I owe more federal tax. Why did the software allow this to happen?

Given that you received a CP2000, it seems likely that it was the deduction for the contribution that was disallowed, not the contribution itself.  This could happen if you failed to indicate that you were covered by a workplace retirement plan but a copy of your W-2 received directly by the IRS had box 13 Retirement plan marked.  It could also happen if you reported income below the threshold above which some or all of your traditional IRA becomes nondeductible but the IRS found that you omitted income that brings you above that threshold.  In that case, in addition to not being eligible for some or all of the deduction you must also file 2017 Form 8606 to report the nondeductible contribution.

 

The only cases I can think of where the CP2000 was the result of a contribution that was not permitted and was reported as a deductible contribution rather than as an excess contribution is if you either entered into TurboTax an incorrect date of birth and you were actually age 70½ or over in 2017 or you reported more compensation than you actually had, did not actually have sufficient compensation to support the contribution and the IRS corrected the reporting of your compensation as well.

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