I intended to deposit 1500$ onto my wife's IRA. Instead, vanguard tricked me to deposit 1500$ amount twice. I wanted to deposit only 1500$ onto my wife's IRA because Turbo tax warned me that any deposit above 1500$ isn't tax deductible. I already filed my tax saying 1500$ as my IRA contribution. Given the circumstances, Can I withdraw money without paying any penalty?
Yes, you must ask Vanguard for a return of contribution (not a normal distribution). You have until the extended due date of the 2016 tax return (Oct 18, 2017) to get a return of a 2016 contribution. They must return the contribution and any earnings that the contribution earned.
See IRS Pub 590A
If you made IRA contributions in 2016, you can withdraw them tax free by the due date of your return. If you have an extension of time to file your return, you can withdraw them tax free by the extended due date. You can do this if, for each contribution you withdraw, both of the following conditions apply.
- You did not take a deduction for the contribution.
- You withdraw any interest or other income earned on the contribution. You can take into account any loss on the contribution while it was in the IRA when calculating the amount that must be withdrawn. If there was a loss, the net income earned on the contribution may be a negative amount.