DawnC
Expert Alumni

Retirement tax questions

Yes.  You should get a screen that says you can only deduct the amount of your earned income, up to $6500 and that you have a non-deductible excess contribution, see image below.  

 

You can contribute no more than $6,500 ($7,500 if you're 50 or over) to all of your traditional and Roth IRAs.  Any more than that is considered an excess contribution and will be taxed at 6% per year.   You can't contribute more than your earned income, either.

 

How do I avoid the 6% tax on excess contributions? 

 

To steer clear of the 6% tax, file a withdrawal request. Contact your financial institution and request to withdraw the excess contribution, plus earnings, by the due date of the return (including extensions).   The earnings are included as taxable income for the year the excess contribution was made.

 

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