the IRS gets records from the IRA custodian as to contributions and withdrawals
. Withdraw Your Excess Contributions
You won't face any penalties if you simply withdraw your excess contribution plus any income it has earned by the due date for your tax return, including extensions. But you'll have to include the earnings portion in your taxable income for the year. The technical term for these earnings is net income attributable (NIA).
You can still withdraw the contribution within six months of your tax return's due date (IE by 10/15 or so) even if you've already filed your tax return for the year.
amendment would only be necessary to either eliminate the penalties because the withdrawal was timely or you didn't report the earnings, if any, properly allocated to the withdrawal.
The other thing you have to watch for in 2022 is a tax credit for qualified retirement contributions form 8880.
if you got this credit you'll need to pay it back.
if the withdrawal was after 4/15/2023 You must at the top of the amended return indicate "filef pursuant to section 301.9100-2" according to the IRS. The agency indicates that you should "Report any related earnings on the amended return and include an explanation of the withdrawal and repayment of the credit and other necessary changes
no amended return would be necessary if all these conditions are met.
1) you did not pay and do not owe the penalty
2) there were no earnings on the contribution or they were withdrawn timely and reported
3) you did not receive the tax credit cited.
this is because nothing will change on your return
if you owe, then The IRS might catch this (it gets info from the IRA custodian so it can check to see if you qualify), in additional to income taxes there could be a late payment penalty and there will be interest.
