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pkutnick
New Member

I made a contribution to a Roth IRA and found out I was not eligible. I did a revoke, I had a loss. When and how do I declare it?

 
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I made a contribution to a Roth IRA and found out I was not eligible. I did a revoke, I had a loss. When and how do I declare it?

In your case since there was a loss and no earnings, report the box 1 amount and say in the explanation statement that the $6,500 Roth contribution had a loss of $300.


*IF* you requested a return of contributions due to an excess contribution and the excess was removed before the extended due date of the 2017 tax return and the earnings were also returned and you know that the IRA custodian will report this as a return of contribution and not as a normal Roth distribution - then:

You can just report it now and ignore the 1099-R when it comes.

You would enter the 1099-R with the total distribution in box 1 (the contribution plus the earnings),

The earnings in box 2a,

Enter code "P" in box 7 (Top) - don t worry that it will say "taxable in 2016 "

Enter code "J" in box 7 (Bottom).

On the "Which year" screen say that this is a *2018* 1099-R.

After the 1099-R summary screen press continue.

If you are over 59 1/2 then on the "Lets see if we can lower your tax bill" enter the box 2a amount in the "Another Reason" box to eliminate the 10% early withdrawal penalty on the earnings.

Enter the explanation for the excess contribution and that you are reporting a 2018 1099-R on your 2017 tax return to avoid having to amend in 2018.

The box 2a earnings will be taxable income reported on line 15b on the 1040 form and if under age 59 1/2 will also be subject to a 10% penalty on a 5329 form that will be reported on line 59 on the 1040 form.

**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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5 Replies

I made a contribution to a Roth IRA and found out I was not eligible. I did a revoke, I had a loss. When and how do I declare it?

How did you "revoke"?  Did you receive a 1099-R?  What year was the contribution for?
Did you have any Roth IRA at the end of 2017?
**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.**

I made a contribution to a Roth IRA and found out I was not eligible. I did a revoke, I had a loss. When and how do I declare it?

In your case since there was a loss and no earnings, report the box 1 amount and say in the explanation statement that the $6,500 Roth contribution had a loss of $300.


*IF* you requested a return of contributions due to an excess contribution and the excess was removed before the extended due date of the 2017 tax return and the earnings were also returned and you know that the IRA custodian will report this as a return of contribution and not as a normal Roth distribution - then:

You can just report it now and ignore the 1099-R when it comes.

You would enter the 1099-R with the total distribution in box 1 (the contribution plus the earnings),

The earnings in box 2a,

Enter code "P" in box 7 (Top) - don t worry that it will say "taxable in 2016 "

Enter code "J" in box 7 (Bottom).

On the "Which year" screen say that this is a *2018* 1099-R.

After the 1099-R summary screen press continue.

If you are over 59 1/2 then on the "Lets see if we can lower your tax bill" enter the box 2a amount in the "Another Reason" box to eliminate the 10% early withdrawal penalty on the earnings.

Enter the explanation for the excess contribution and that you are reporting a 2018 1099-R on your 2017 tax return to avoid having to amend in 2018.

The box 2a earnings will be taxable income reported on line 15b on the 1040 form and if under age 59 1/2 will also be subject to a 10% penalty on a 5329 form that will be reported on line 59 on the 1040 form.

**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.**
pkutnick
New Member

I made a contribution to a Roth IRA and found out I was not eligible. I did a revoke, I had a loss. When and how do I declare it?

Not sure I total understand this.  I am over 59 1/2. so do I put anything in the deduction section for my Roth iRA?  like saying I contributed and then saying I remove the excess?  If so in that section do I say I added 6500 and removed 6200?  Will filling out the 1099 have any effect on taxes since it is a loss?

I made a contribution to a Roth IRA and found out I was not eligible. I did a revoke, I had a loss. When and how do I declare it?

Nothing goes in the IRA contribution section at all because a return for contribution is the same as never making any contribution in the first place.

Gains and losses *within* a retirement account are not reported.

Gains returned to you would be taxable income because you received the earnings outside of the retirement account, but losses *within* a retirement account are not deductible - you just had less money returned.
**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.**
pkutnick
New Member

I made a contribution to a Roth IRA and found out I was not eligible. I did a revoke, I had a loss. When and how do I declare it?

I made a 2017 contribute in Jan 2018.  I called the broker 2/14/2018 to revoke the contribution.  I call broker today and they said I would get a 1099-R next year for this.  My contribution was 6500, but they said my revoke was on 6200, since the account had a loss.  Trying to figure what to put in my 2017 tax returns.
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