In doing the 2024 tax return for a family member, we mistakenly assumed (because of the prior-year recharacterization out of a Roth IRA that showed up on his statement) that he had made excess contributions to his non-deductible traditional IRA.
As a result, he withdrew the excess amount ($165 plus earnings for a total of $192). We quickly discovered our mistake ... that he had NOT made excess contributions ... so he returned the total amount distributed to the same IRA within the 60-day window we have read about.
While these two transactions (withdrawal and return including earnings) occurred in 2025, the manager characterized them as 2024 contributions returned by the end of the tax year.
We assume a 1099-R for 2025 will show the withdrawal, even though the amount was quickly returned. Where on Form 8606 and on Form 1040 for 2025 will we place this information? And how is this transaction to be characterized. Someone said a rollover, though a return does not seem to fit the definition of a rollover.
And how do we show that there are no tax implications because the amount was returned within the 60-day window? We assume a memo will need to be included with the 2025 return as well.
P.S. He is under 59.5 years of age.
Thank you for any answers!
