@shr22 wrote:
Thank you for the explanation Champ.
To clarify, I'm of age so no 10% penalty and I have one IRA account.
According to form 8606 instructions, I may have an opportunity to get back the non deductible contribution? How do I interpret the instructions? Have I completely missed my chance as you mentioned before? If there is still a chance, how do I file an amendment Federal/State (OR)?
Return of IRA Contributions
If you timely filed your 2021 tax return
without withdrawing a contribution that
you made in 2021, you can still have the
contribution returned to you within 6
months of the due date of your 2021 tax
return, excluding extensions. If you do,
file an amended return for your 2021 tax
year with “Filed pursuant to section
301.9100-2” written at the top. Report
any related earnings on the amended
return and include an explanation of the
withdrawn contribution.
Yes, that procedure is available to you if you complete the withdrawal and file the amended return by October 15, 2022. However, that is not a "Regular" withdrawal. You have to tell the IRA custodian before you make the withdrawal that you want to make a corrective withdrawal of a non-deductible contribution under section 301. The custodian will send you the contribution (in this case, $7000) PLUS any earnings attributable to the contribution (if you have earnings, and haven't lost value in the present market. If you lost value, you have to withdraw $7000, not the lower value it might have now.). The earnings are reported as taxable income on your amended tax return, and since you won't have a 1099-R, you use a procedure in turbotax to create a substitute 1099-R to report the earnings.
If you did a regular withdrawal, that's going to count as a regular taxable withdrawal unless you can reverse it within the 60 days and then do a new corrective withdrawal. If it is more than 60 days, you can tell the IRA custodian that you meant to do a corrective withdrawal ask them to please change the paperwork and reprocess it. (They probably won't, but you can ask.) If you took a regular withdrawal and it is too late to return it, you could still take a second withdrawal of the $7000 as a corrective withdrawal under section 301. The first withdrawal would be taxable on your 2022 return.
