Turbox told me that I have excess contribution for Traditional IRA and thus have to pay a penalty of $420. This amount will be deducted from my refund. But I do not have excess contribution. I called my bank and they verified that I do not have excess contribution for traditional IRA. In march of this year, I contributed towards 2021, and 2020, $7000 each. (I am over 50 years old). I believe there is a problem with Turbotax calculation, as I am allowed to contributed for 2021 and last year of 2020. So how this problem is to be solved. I just lost $420 due to Turbo tax.
Thanks
As I was talking to my bank, they told me that several other people had called them and had similar non existing problem of Turbotax telling them of "excess IRA contribution"
Please be aware, the total contributions you make each year to all of your traditional IRAs and Roth IRAs can't be more than:
Just to clarify, you had taxable compensation (like wages, salary) of at least $7,000 in 2020 and you entered $7,000 as a traditional IRA contribution?
I contributed $7000 for 2021 in March of this year (2021). I am over 50 so I can contribute $1000 extra.
I contributed $7000 for 2020 in March of this year(2021). Until May 17, you can also contribute to previous year.
So there is no excess, and the bank (Navy Federal Credit Union) also told me that there was no excess contribution.
All contribution was for Traditional IRA
Not sure what do you mean but "Taxalbe" All those money I contributed were already taxed. I transferred them from my checking account. They were deposited in my account from direct pay of employer. They were already taxed
You have to have earned income in tax year 2020 (same will apply in 2021) - meaning you have a W-2 or net business income in an amount that is equal to or exceeds your contributions.
Did you earned income in 2020?