I mistakenly performed a 2019 IRA contribution of $6000 on Feb. 20, 2020.
When I found out that I was not eligible and this contribution was not deductible, I continued to submit my 2019 tax return without taking the deduction.
After submitting an Excess IRA Contribution Withdrawal form for the $6000, it was returned to me on April 8,2020 but I was only given $5500 due to market fluctuation even though I did not invest the contribution. (This is a short-sighted calculation by the IRS)
I am curious about the tax impact. I am under the impression that I don't need to refile my 2019 taxes because I didn't take any deductions and I withdrew the amount prior to stated deadlines.
But, will I be able to claim any tax loss for the $500 that was unexpectedly "withheld" by the current IRS recommended calculation that my brokerage performed? My broker says they will note the withdrawal on next years forms.
Any help is appreciated!
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You will receive a 2020 1099-R reporting this that should be entered in an amended 2019 tax return. However, only any gain shown in box 2a would be taxable. If there was a loss and less was returned than your contribution then there would be no reason to amend since it would not change anything.
Losses in a IRA are not deductible and not reported anywhere.
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