My husband and I started filing married filing separately for student loan benefits in 2017. (As I sit here today, I now know we cannot directly contribute to a Roth IRA if we make over $10,000 and how to get money into a Roth via a Traditional IRA.)
We hired a CPA to do our taxes in 2017. We gave him our tax documents showing contributions to a Roth IRA and income in excess of $10,000. He said nothing about the income limit.
We contributed to the Roth IRA in 2018 and used Turbo tax to do our taxes. The software did not prompt us or cue us to the fact that we made excess contributions.
We contributed to the Roth IRA in 2019. I will be recharacterizing those contributions and putting them into a Traditional IRA.
After speaking to one CPA (not so great) and two Turbotax professionals (who were great), I believe these are the steps I need to take.
1. File amended returns for both my husband and myself for 2017 and pay the 6% penalty on the contributions and earnings.
2. File amended returns for both my husband and myself for 2018 and pay the 6% penalty for 2018 contributions and earnings and for 2017 contributions and earnings.
3. Withdraw the excess contributions and earnings ASAP and put them into a traditional IRA.
First question: If I remove the excess contributions before the filing date for 2019 taxes, do I have to pay the 6% penalty on our 2019 taxes for 2017 and 2018?
Second question: Removing the funds will be a taxable event for 2020 and I will incur a 10% penalty on the withdrawal, correct?
Third question: Am I missing anything?
Thank you so much in advance.
