Thank you, thank you and a big thank you!
Box 7, P - return of contribution taxable in 2020 ($3398 should it be a return taxable in 2021? or it implies the return of $1250 contribution?). I am confused here. Is P the correct code?
You are right, her AGI is higher than her deduction.
We don't fully understand the 3rd paragraph. After seeing her first ever earning of $2800 shrinks down so dramatically, she wants to try your fancy advise.
To make things more complicated, she contributed $6K to Vanguard on 2/25/22 for 2022 Roth. She asked if this is action list.
1. Take out $6K from 2022 Roth.
2. Transfer $1250 plus earning from 2021 Roth to 2022 Roth. Is it called "rollover" or just transfer 2021credit to 2022?
3. Transfer $1250 from her bank to vanguard 2021 Roth. This is a rollover but how does IRS or Vanguard knows it's a roll over from 2020 Roth?
Above plan will introduce two "rollovers", which is not allowed, correct? So "step 2" should be "transfer $1250 plus earning from 2021 Roth to her bank account". If this is the case, should we just don't do "step 1" and leave it for now?
$1250 generate about $165 earnings if I did it correctly, so far off from your 30% gain concern. The question is
1. do we have time to figure out all the correct earnings before 4/17?
2. if we do our dumb $75 penalty way for 2021, it will eliminate her chance of contributing 2022 Roth? She asked how much she needs to make to be able to contribute to 2022 Roth? Like above $3250 W-2 salary?
Thank you so much for your kind replies, we are truly grateful!
