Amend Return on IRA Contribution Earnings Question

[tsop572002]

Greetings,

In 2018 I contributed $6,500 to my IRA, then found out I can only contribute $3,713 as non-deductible IRA. I then followed the turbotax instructions and put aside $2,787 as contribution for 2019. But when I file my 2019 tax, I found that I am not eligible for contributions and so I withdrew the $2,787 before filing deadline. Now turbotax said I may need to amend 2018 tax because of reports of earnings on a contribution I made in 2018. Which section I need to amend? Am I correct to calculate earnings on the $2,787 by using two year-end air market values? Appreciate any help you can provide.

[dmertz]

Presumably the Form 1099-R for the return of the excess contribution includes code P in box 8.  Does the Form 1099-R reporting the return of the excess contribution show any earnings in box 2a?  If so and this amount was not already included on 2018 Form 1040 line 4b, yes you need to amend 2018.  You do this by entering into 2018 TurboTax this 2019 Form 1099-R and in the follow-up indicate that the year on the Form 1099-R is 2019, not a 2018.

[tsop572002]

Hi, thanks for the response. The 1099-R did have distribution code P but did not show any earnings in box 2a, now what should I do?

[dmertz · Accepted solution]

There is no need to amend 2018.  Your 2018 tax return should have included an explanation statement indicating that there was a return of excess contribution and that there was no investment gain that needed to accompany the returned contribution, but if your 2018 return did not include that I would just keep an explanation in your 2018 tax records that you can provide if the IRS ever asks for explanation.

[tsop572002]

Thank you so much for your help!!!