I opened an IRA account on April 15th attempting to transfer funds from my bank account. I mistakenly used an account the bank had closed, and so the transfer was rejected. I now need to file an amendment to remove the $3000 IRA contribution. Will there be a penalty? Any other ramifications?
Possibly. If you owe tax when you amend, and it is after April 15, you may owe 0.5% penalty and 0.5% interest per month on the amount you owe. For a $5000 IRA, you probably will owe $1250 in extra tax, so $26 penalty plus interest if you amend and pay before May 15, $52 if you amend after May 15 but before June 15, and so on.
You can also request a penalty waiver if this is your first time with a penalty, but the interest can't be waived by law. Don't pay a penalty with your taxes when you amend even if Turbotax offers. Wait to get billed.