Excess roth contributions turbo tax computing wrong

Forum|Forum|7 years ago
June 6, 2019
3 replies
11 views

i had excess roth contributions for 2016 and i want to leave it and pay 6 % penalty. but turbo tax is flagging me for ira value on worksheet and if i put in any amount other than the amt of the contribution it removes the penalty that i know i have to pay and increases my refund amt. how do i resolve this issue?

TurboTax Deluxe Windows

dmertz

Level 15

"turbo tax is flagging me for ira value on worksheet"

What value on what worksheet? TurboTax handles this correctly provided correct entries are made.

Make sure that you are entering the entire Roth IRA contribution that you made and you have not indicated that you will be receiving a return of excess contribution before the due date of your tax return. You should be making these entries in step-by-step mode. If you are making entries in forms mode, be aware that TurboTax's accuracy guarantee does not apply to errors resulting from entries made in forms mode.

blsdtrly1Author

Level 2

ok thanks. this happens when I do final review and comes up as an error flag on my 5329 form. under line 24., which keeps me from efiling. i called and did share screen with turbo tax support and they couldn't figure it out either.

dmertz

Level 15

When you have an excess contribution in your Roth IRA, the penalty is 6% of the lesser of the amount of the excess or the total 2016 year-end balance in all of your Roth IRAs. TurboTax therefore requires that you enter the year-end balance on line A of the Roth IRA Value Smart Worksheet.

Normally you would do this in step-by-step mode by clicking the Continue button on the Your 1099-R Entries page and proceeding through all of the follow-up, including indicating that you will not be requesting a return of excess contribution and then entering your total year-end balance you have in your own in Roth IRAs. You can also do this in forms mode or during the Smart Check by making the entry directly on line A of the Roth IRA Value Smart Worksheet that is part of TurboTax's 5329 form.

Note that paying the 6% only takes care of the penalty for 2016. You'll still have a 6% penalty for this excess for each subsequent year that the excess remains. You'll be able to eliminate the excess in a subsequent year by either applying it as an eligible contribution for that subsequent year or by making a regular Roth IRA distribution of the amount of the excess (not to include any earnings attributable to the excess) in that subsequent year.

blsdtrly1Author

Level 2

@ dmertz. hello and thanks for your help and responding. I don't have my year end statement as of yet, but the lesser of the two is my current excess contribution. so do I just enter that amount in the step by step mode?