Adjusted a 2016 Roth IRA contribution

[dcbolan930]

I over contributed to my Roth IRA in 2016.  I have asked my Trustee to remove the amount over what I am
allowed.   TT, is calculating an Additional Tax on the IRA.  The IRS Pub 590 states that I can make this adjustment without the 6% penalty if done before April 18, 2017.  How do I enter the information into TT without triggering a penalty?

[ChristinaS · Accepted solution]

You need to remove the reporting of the excess contribution from Turbo Tax.

On your tax return, there is no tax form which shows that you overcontributed and then withdrew X amount. All that is shown is the excess contribution not withdrawn, and thus the penalty on that excess.

So, if you will withdraw the excess (plus earnings), remove the contribution from Federal Taxes- Deductions and Credits- IRA Contributions- Roth. For best results, keep the Roth box checked and continue forward to back out the actual dollar amount.

You also want to account for the earnings now. You will receive a 1099-R form next year, but it relates to your 2016 return. Rather than amending 2016 down the road, possibly owing interest, pretend you have the 1099-R now and report the earnings before you file.

• Form 1099-R (Federal Taxes- Wages and Income- Retirement Plans and Social Security)
• Box 1 = $ the contribution withdrawn, including earnings
• Box 2a = $ the earnings
• Box 7 = code P (And, if you are under age 59½, code J as well)
• Do not check the IRA box

In the follow-up questions, be sure to indicate that the Form 1099-R is a 2017 Form 1099-R.