How do I report reversal of an excess contribution to a non-deductible IRA for 2022? The reversal occured prior to tax filing deadline and there was no extra income.

[Anonymous_]

@dmertz?

[fanfare]

If you properly removed an excess before Tax Day, there is no excess contribution.

If you did not get positive earnings back, there is nothing to report.

@sadanarupp 

[fanfare]

If you got a 2022 1099-R put the distribution on Line 4a and -0-  on Line 4b.

@sadanarupp 

[sadanarupp]

Thank you all for taking the time to answer these questions, it is invaluable and greatly appreciated!

Fidelity says the 2022 1099-R will be mailed in Jan 2024 (the contribution and reversal took place in 2023 for TY 2022). So, I will not have a 1099-R for this at the time of my filing w/ extension on 10/16/23 (this Monday).

I saw online (ironically at the H&R website)  that Form 5329 needs to be filled out. I can't seem to find a way to have TT generate this form, and I don't want to file without it as I would like to avoid having to file an amended return next year to address this situation if I don't address this now. Hence my question!

From the IRS website, it appears that I do have to file form 5329... under the "Who must file" section, there is this statement that appears to apply to me:

" The contributions for 2022 to your traditional IRAs, Roth IRAs,
Coverdell ESAs, Archer MSAs, HSAs, or ABLE accounts
exceed your maximum contribution limit, or you had a tax due
from an excess contribution on line 17, 25, 33, 41, or 49 of your
2021 Form 5329" 

Hmmm.... what to do....

THanks again to all you savvy tax experts for fielding this... 

[fanfare]

What is the actual day in 2023 when you withdrew the contribution.?

That makes all the difference whether you owe a penalty or not.

@sadanarupp 

[fanfare]

why are you filing now with one day to go?

Did you request an extension of time with Form 4868 before Tax Day?

Are you residing in a designated disaster area with an extended filing date?

@sadanarupp 

[sadanarupp]

Reversal of excess contributions processed April 12th 2023 for TY 2022. Thus reversal occured before the April 18 2023 (Tax Day). I filed an extension so I would have time to figure out the proper paperwork needed to address this. I don't live in a disaster declaration area. 

[fanfare]

you corrected the excess before Tax Day.

You don't owe a penalty and you don't have to file Form 5329.

Because you filed an extension, you had more time to remove the excess, but that doesn't matter now.

You don't have to report anything on your 2022 tax return because you timely removed the excess.

@sadanarupp 

[Herve5]

@fanfare  which form are you referring to ?

"If you got a 2022 1099-R put the distribution on Line 4a and -0-  on Line 4b." Thank you!!

[fanfare]

sadanarupp said:

"Fidelity says the 2022 1099-R will be mailed in Jan 2024 "

This doesn't sound right to me, but if I recall correctly, I was commenting in case it actually happens.

I referred to 2022 Form 1040.

Since in this situation, there are no allocable earnings (no taxable amounts are changing), it's not necessary to do this if 2022 is already filed.

I think the 1099-R will be a 2023 1099-R.

@Herve5