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steph1131988
New Member

I contributed to a Roth IRA this year, not realizing with my tax status and income that I wasn't allowed. I have withdrawn the excess funds. Do I need to put that info on my return?

 
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ChristinaS
New Member

I contributed to a Roth IRA this year, not realizing with my tax status and income that I wasn't allowed. I have withdrawn the excess funds. Do I need to put that info on my return?

You made an excess contribution in 2016, correct? If you have earnings on that contribution, they also need to be withdrawn. You will get a 1099-R for the withdrawal of the excess contribution next year, but the earnings are taxable on your 2016 return. Instead of waiting a year for that 1099-R and having to amend 2016, you should account for that 1099-R now. The broker should give you a statement showing the earnings calculated as part of this withdrawal of your contribution.

Remove the contribution from IRA contributions under Deductions and Credits

Enter the 1099-R under Wages and Income- Retirement Plans and Social Security

If you have the money in a popular brokerage company, you can probably get their EIN online rather easily.

Box 1- the total amount that came out (contribution plus earnings)

Box 2a- the taxable earnings

Enter Code J (AND Code 8 if under 59 1/2) in Box 7

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.

View solution in original post

4 Replies
ChristinaS
New Member

I contributed to a Roth IRA this year, not realizing with my tax status and income that I wasn't allowed. I have withdrawn the excess funds. Do I need to put that info on my return?

You made an excess contribution in 2016, correct? If you have earnings on that contribution, they also need to be withdrawn. You will get a 1099-R for the withdrawal of the excess contribution next year, but the earnings are taxable on your 2016 return. Instead of waiting a year for that 1099-R and having to amend 2016, you should account for that 1099-R now. The broker should give you a statement showing the earnings calculated as part of this withdrawal of your contribution.

Remove the contribution from IRA contributions under Deductions and Credits

Enter the 1099-R under Wages and Income- Retirement Plans and Social Security

If you have the money in a popular brokerage company, you can probably get their EIN online rather easily.

Box 1- the total amount that came out (contribution plus earnings)

Box 2a- the taxable earnings

Enter Code J (AND Code 8 if under 59 1/2) in Box 7

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.

View solution in original post

steph1131988
New Member

I contributed to a Roth IRA this year, not realizing with my tax status and income that I wasn't allowed. I have withdrawn the excess funds. Do I need to put that info on my return?

Thank you!  Yes, I had made an excess contribution for 2016.  I have already made an excess contribution for 2017 as well; which I also withdrew.  Should I lump 2016 and 2017 excess contribution earnings together on the 1099-R?
macuser_22
Level 15

I contributed to a Roth IRA this year, not realizing with my tax status and income that I wasn't allowed. I have withdrawn the excess funds. Do I need to put that info on my return?

"Enter Code J (AND Code 8 if under 59 1/2) in Box 7"  That is not quite correct.

For a Roth it is *always* a J8 reguardless of age.   A code J by itself is a normal Roth distribution.  It is the 8 that says that it is a return of contribution.   A 8 by itself is for a 401(k) return and places the box 2a amount on line 7 as wages, not on line 15b as required.  For a Roth return of contribution in the current tax year both a J and a 8 (J8) are always required in box 7.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
macuser_22
Level 15

I contributed to a Roth IRA this year, not realizing with my tax status and income that I wasn't allowed. I have withdrawn the excess funds. Do I need to put that info on my return?

A contribution made in 2017 and returned must be reported on your 2017 tax return next year, not 2016.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
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