Solved: I contributed $6,500 too much to my Roth in 2016 for tax year 2016. I submitted a form to brokerage firm. How do I claim this on my 2016 taxes?
cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
New Member

I contributed $6,500 too much to my Roth in 2016 for tax year 2016. I submitted a form to brokerage firm. How do I claim this on my 2016 taxes?

How do I report my $6,500 over contribution to my Roth in 2016? I submitted a withdrawal form to brokerage firm 3/6/2017 before tax deadline.
1 Best answer

Accepted Solutions
Highlighted
New Member

I contributed $6,500 too much to my Roth in 2016 for tax year 2016. I submitted a form to brokerage firm. How do I claim this on my 2016 taxes?

Since your excess contribution is being corrected, you will not report the excess contribution at all. Only uncorrected excess contributions are subject to the excise penalty. If and when you enter the Roth contribution within the program, you will be instructed to take out the money and remove the entry from Roth contributions.

Now, you need to wait on the custodian to calculate the earnings attributable to this excess contribution, as you will be withdrawing $6500 plus earnings. You need to pay tax on these earnings in 2016, although you won't get the 1099-R for this until next year. Although the 1099-R comes in 2018, the taxable event is in 2016. You should account for your earnings now by inputting a "mock" tax form now:

  • Go to Federal Taxes-Wages and Income-Retirement Plans and Social Security (1099-R)
  • If you have the money in a popular brokerage company, you can probably get their EIN and payer address online rather easily.
  • Box 1- the total amount that came out ($6500 plus earnings)
  • Box 2a- the taxable earnings
  • Enter Code J in Box 7 (and Code 8 in Box 7 if under 59 1/2)
  • Don't check the IRA box

You will type a brief statement explaining your excess contribution and how the earnings got calculated.

Next year, you'll get a 1099-R with Code P on it. Code P will mean taxable in 2016. And you will already have accounted for that on your 2016 return.

View solution in original post

1 Reply
Highlighted
New Member

I contributed $6,500 too much to my Roth in 2016 for tax year 2016. I submitted a form to brokerage firm. How do I claim this on my 2016 taxes?

Since your excess contribution is being corrected, you will not report the excess contribution at all. Only uncorrected excess contributions are subject to the excise penalty. If and when you enter the Roth contribution within the program, you will be instructed to take out the money and remove the entry from Roth contributions.

Now, you need to wait on the custodian to calculate the earnings attributable to this excess contribution, as you will be withdrawing $6500 plus earnings. You need to pay tax on these earnings in 2016, although you won't get the 1099-R for this until next year. Although the 1099-R comes in 2018, the taxable event is in 2016. You should account for your earnings now by inputting a "mock" tax form now:

  • Go to Federal Taxes-Wages and Income-Retirement Plans and Social Security (1099-R)
  • If you have the money in a popular brokerage company, you can probably get their EIN and payer address online rather easily.
  • Box 1- the total amount that came out ($6500 plus earnings)
  • Box 2a- the taxable earnings
  • Enter Code J in Box 7 (and Code 8 in Box 7 if under 59 1/2)
  • Don't check the IRA box

You will type a brief statement explaining your excess contribution and how the earnings got calculated.

Next year, you'll get a 1099-R with Code P on it. Code P will mean taxable in 2016. And you will already have accounted for that on your 2016 return.

View solution in original post

v
Privacy Settings