I filed my 2023 taxes on time by April 15, 2023, deadline. Since I became aware of my excess contributions for 2022 and 2023 only a few days before that, I attempted to remove as much as I could based on my limited understanding. Here are the details of removals -
2022 contributions removed -
April 22, 2023 - self (contributions only with no fed tax withholding)
May 10, 2023 - spouse (contributions but broker decided to do 10% fed tax withholding and is not willing to correct it so far saying it can't be changed now)
2023 contributions removed -
April 15, 2023 - self (contributions for 2023 tax year made in 2023 + earnings tax withholding)
April 19, 2023 - self (contributions for 2023 made in 2024 before Tax deadline of April 15, 2023)
2023 excess for spouse for 2023 to be removed in next few days (this contribution was made by Dec 31, 2023)
So now, this is what I am understanding (and hopefully do) based on the feedback I am getting so far.
1. Amed the 2022 return with 5329 for self and wife with schedule 2 and pay 6% penalty. In case broker doesn't change the situation related to tax withholding, do the 2022 amendment any ways without fed withholding consideration. Correct me if I am wrong, hopefully I will get fed withholding back when I receive 1099R and report it when filing 2024 taxes.
2. Amend 2023 taxes (as filed by April 15, 2024) to report removal and earnings by Oct 15, 2024. I need to file 1040X with “Filed pursuant to section 301.9100-2” written at the top. However, I'm still confused about forms that I need to file earnings on to reflect it on 1040X. Following are the observations and questions I have regarding the forms I may have to to complete and attach:
(a) 5329 for self and spouse to pay any penalty (not clear if 6% penalty needs to be paid again as I already would have paid 6% when amending 2022). I am yet not clear about 10% penalty that I believe I have to pay on my wife's earnings on the excess contribution.
(b) Not sure how (what forms etc) excess contributions for 2023 removed will be reflected on amendment.
(c) Do I need to amend and submit schedule D to reflect earnings on excess contributions with 1040X. Am I to redo all of Schedule D to reflect 2023 earnings on withdrawals in it? If that is the case, the earnings are so miniscule that will be offset by carryover losses (both long term and short term and number to enter on 1040X will not change. Bigger questions for me is how and where to reflect these additional earnings to amend schedule D or other form that I may have to file. Additionally, since my broker split the distributions on contributions made in 2023 for 2023 contributions and 2023 contributions made between Jan 1, 2024 - April 15, 2024, would that portion be covered in 2023 amendment. My understanding is no, but any feedback will be appreciated.
(d). anything, I may be missing so far.
@fanfare
