@katekatekate wrote:
hi,
I made 2 contributions in 2020 for 2019 and 2020, both are excess and I had them returned in May 2021. I am trying to amend my 2020 returns. My questions are:
1. I paid 6% penalty on both contributions on the original 2020 federal tax I filed already, but now with the adjustment I seem to only get refund for 6% of one of the contribution. How can I fix this? My understanding is that I returned the contribution before Oct 2021 and I don/t need to pay 6% on the contribution amount.
Your understanding is not correct. For the 2019 excess to avoid the 2019 penalty it has to be removed before the 2019 due date which was July 15, 2020. So you need to file a 2019 5329 for and pay the 2019 6% penalty. But that penalty repeats each year until removed so you also need to file a 2020 5329 with another 6 penalty for the 2019 contribution.
For 2020, IF you either filed for an extension OR filed you 2020 tax return on time before May 17, 2021, then you have until Oct 15, 2021 to have a "return of contribution" plus earnings. Only the returned earnings will be taxable if the resulting 1099-R has a code JP in box 7.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
