Have gotten myself into a good mess with my Roth (and Backdoor Roth) contributions for tax year 2020 I’m hoping to get help with. Have outlined everything below as detailed as possible including what I think needs to be done. Thank you in advance for your collective help and insight.
- 1/2/2020 - contributed $6K to Roth IRA
- Early 2021, while filing taxes, realized I made too much to contribute to Roth for tax year 2020
- 3/3/2020 - removed $8K (original $6K contribution + net income from interest) with 24% tax withholding
- 3/3/2020 - recharactericized full amount (probably should have just been $6K...) to Traditional IRA
- 3/4/2020 - removed the above contribution from Traditional IRA
- 3/4/2020 - converted full amount $8K to Roth IRA (backdoor Roth contribution)
Outstanding Questions
- How do I correct the excess amount contributed to the Traditional IRA (and subsequent conversion to Roth IRA as part of Backdoor IRA)?
- Can I no longer convert the excess from the Roth back to the Traditional IRA (and subsequently withdraw?) if not, will this be “absorbed” for tax year 2021 and I’ll pay a 6% penalty for tax year 2020?
- What exact tax forms do I need to properly file net income on the interest from the excess contributions?
- What does the 24% tax withholding do exactly?
