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egg1
Level 2

Hi. I have a situation in which an IRA Contribution was made in error. It was withdrawn and no income was earned on it prior to the withdrawal. It was included on 5498.

All happened prior to Due Date of the Return.
What Tax Form needs to used in 2023 Filing so this does not show up as excess/unallowed IRA Contribution subject to 6% Tax?

In 2024 will be receiving the 1099-R showing the withdrawals.
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2 Replies

Hi. I have a situation in which an IRA Contribution was made in error. It was withdrawn and no income was earned on it prior to the withdrawal. It was included on 5498.


return of excess contribution: Case 1.

before tax filing date including extension: positive earnings allocable to the excess are included in income on 1040 Line 4b for the year of the contribution. negative  or zero earnings are ignored; in any case, for purposes of basis, consider the original contribution amount as returned.

 

--

In this Case, there is no penalty.

If you took a deduction (unlikely) and filed,, that would have to be undone by amendment

 

@egg1 

egg1
Level 2

Hi. I have a situation in which an IRA Contribution was made in error. It was withdrawn and no income was earned on it prior to the withdrawal. It was included on 5498.

Thank you very much

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