I paid my taxes but didnt file returns yet.
For 2024 1099R simply ignored mistake and indicated what was on the 1099 ( line 2a zero).
2023 more complex. I want to avoid an excessive contributions code on a 1099 next yr.
The custodian won't change codes. But I don't understand how you can change the P to a 7 ( pls recall I'm 68 yo.) It isnt a regular distribution because the 7500 for 2023 was returned to the taxable acct, as I wasnt eligible to make it, right? So how is it not an excessive contribution? And it was taken out in 2024 and returned in 2024 but the earnings were not so even if I return them in 2025 ( which I did) there is a 6% penalty, right?
For the 2023 excess contribution I DID enter 79.50 ( the earnings) on line 2a. (This contradicts the 1099 but is consistent with the P code and I figure I cant get in trouble for listing more tax than the 1099-R says I owe). Oddly the total tax for the completed return didnt change at all. I dont understand why. Is it because I pay the tax on the earnings in the 2025 tax year?
Since I didnt want it to be considered an excess contribution, I did apply it to a Trad IRA for this 2025 tax year at your suggestion. I hope that is correct. I'm eligible to do that as I have time to earn it. I couldnt do it for 2024 as I had no earnings. Will applying mean that I've eliminated the excess contribution designation? and a 1099 with that P code? I assume I have no tax to pay on it this year then.
I understand I do have to amend both fed and state 2023 returns to pay the 6% penalty tax since the custodian left the earnings in the IRA past the 4/15/24 deadline to remove them. Is that correct?
If I complete the amended returns before Tax Day next yr, will I incur any interest on this penalty or additional penalties.
Thank you.
