I've read several other posts that describe a similar situation, but I thought it was best to start a fresh thread because of reading conflicting advice. While preparing my 2023 tax return, TT flagged that our income (married filing jointly) was too high to contribute to Roth IRAs. After looking into this further, I’ve realized that our income has been too high since 2021 (not sure why TT missed this in 2021 and 2022...) and now I'm trying to resolve it. We are both under age 59 ½ and until now, I’ve never received a Roth IRA distribution of any kind.
My wife and I each contributed to our Roth IRA's for $800 ea. in 2021, $800 ea. in 2022 and $600 ea. in 2023. No 5329 forms have been filed in the past. I've not yet filed my 2023 taxes and I'm trying to understand Form 5329 and related forms needed for 2021, 2022 and 2023.
I've had Edward Jones (EJ) remove the excess contributions for 2021, 2022 and 2023. The removal for 2023 contributions included earnings of $147 and $145 for myself and my wife. EJ indicates that no earnings calculation is applicable for 2021 and 2022. EJ indicates that I will not receive the 1099-R until January 2025 (that seems problematic, since TT asks for this).
Some questions:
- I’ve been using TT online for several years, so can I electronically file 2021 and 2022 1040X amendments with their respective Form 5329 using TT online? Any tips on how to tell TT about the changes, since I don’t have a 1099-R yet?
- For 2021 and 2022, besides Forms 5329 and 1040X, are any other forms required? I wondered if 8606 was needed, but since there are no earnings to report, I’m thinking not.
- Looks to me like Form 5329 will be a penalty of $800 ea x 6% in 2021 and $1,600 ea x 6% in 2022, with 2022 being higher because it includes 2021.
- For the 2023 Form 5329, I’m thinking Line 20, “2023 distributions from your Roth IRAs”, is $2,200 for each Roth IRA (total of all excess contributions returned ahead of filing 2023 taxes). End result of Part IV calcs is no 6% penalty, because all excess contributions have been removed, however, I will have a 10% penalty on earnings for 2023 (Part I of 5329). Does that all sound correct?
- Do I need to complete the 5329’s for 2021 and 2022 (along with the 1040X for each) before I’m able to complete the 5329 for 2023? (I know that eventually Line 24 of 5329 for 2022 will be $1,600). If so, I may need to request an extension for 2023.
