I made 2 IRA distributions: in 3/2015 & 12/2015. I 'rolled back' to IRA the second withdrawal within 60 days. Does this returned amount qualify for 60 days tax exemption?

[SweetieJean]

You kept the first one?

[SweetieJean]

and are you doing a 2015 return?

[Kapolei]

Yes, I kept the first one.    I returned 100% of the second one.

[Kapolei]

i filed the 2015 return in time. i returned the second distribution to my account within 60 days. I just received IRS letter disallowing the 'rollover' status of the second distribution, although was is credited back in time and the agent who assisted me stated that everything i did s correct!!!.

[dmertz]

Without a full audit of the transactions involved, it's unlikely that the IRS will detect a rollover in violation of the one-per-year rule or a failure to meet the 60-day deadline, so failing to report the rollover seems the most likely cause of the notice from the IRS.  On your 2015 tax return, did you report the rollover of the second distribution?  Unless reported as a rollover, the IRS assumes that the distribution fully taxable.

A properly reported rollover of an IRA distribution will be included on Form 1040 line 15a (or Form 1040A line 11a) but excluded from line 15b (or 11b) and showing the word ROLLOVER next to line 15 (or 11).

[Kapolei]

From my 1040:    Line 15a: $35,000.        b. taxable amount. ROLLOVER            Line 15b: 20,000     (I returned 15,000 within 60 days)

[Kapolei]

The IRA letter (CP2000)  claims the 'difference' and asks me to pay the tax + penalty!

[Critter]

You should have a form 5498 showing the rollover & it should also show on the broker/bank statements ... use those to prove the rollover happened timely.

[Kapolei]

THANK YOU!

[SweetieJean · Accepted solution]

I had the same issue a few years back. Since the distribution was in one taxable year and the rollover (although within the required 60 days) was in the next, all I had to do was provide the IRS with documentation of the actual rollover/repayment. So them copies of your paperwork and cancelled check.

[dmertz]

It's rather premature for the IRS to be questioning whether or not a 2015 distribution was rolled over since they know that the rollover of a late-in-the-year distribution might not be completed until the beginning of the following year.

You'll need to use your account statements to substantiate the rollover.  The 2016 Form 5498 reporting receipt of the rollover contribution will not be issued by the IRA custodian until May of 2017 (which is why it's premature for the IRS to be questioning this).