TT claims I made an excess contribution to a Roth IRA

[fwick]

I am a college student. I earned ~$5,000 from a summer job. I made a contribution of $3,000 to a Roth IRA. My understanding is that I can contribute up to the maximum ($6,000) -OR- up to my earned income (~$5,000), whichever is less. TT won't explain why it thinks I contributed to much. It just says the following:

"You need to upgrade to Turbo Tax Deluxe"

You have Additional Tax on Excess Contributions or Deductions (Form 5329).

TurboTax Free Edition does not cover this situation

1. Did I make an excessive contribution? If so, how do I find out the maximum that I am eligible to contribute so that I can withdraw the excess?

2. If I didn't make an excess contribution, how can I tell this to TT?

[DanaB27]

Yes, for 2021 the total contributions you make each year to all of your traditional IRAs  and Roth IRAs can't be more than:

• $6,000 ($7,000 if you're age 50 or older), or
• If less, your taxable compensation for the year

The about $5,000 income was it wages on a W-2 and you entered them?

1. Click on "Search" on the top right and type “W-2”
2. Click on “Jump to W-2”

Or was it self-employment income? If you are self-employed compensation is the net earnings from your trade or business reduced by the total of:

• The deduction for contributions made on your behalf to retirement plans, and

• The deduction allowed for the deductible part of your self-employment taxes.

[VolvoGirl]

How much is showing up on your 1040 line 1 for Wages?  Did you get a W2 or something else?  Does the message say how much excess it thinks you contributed?   It must not be showing any income for you.  

Before filing you can preview the 1040 or print the whole return
https://ttlc.intuit.com/community/accessing/help/how-do-i-preview-my-turbotax-online-return-before-f...

[fwick]

Yes. The ~$5k was from a W-2, which I entered.

I do not have self-employment income.

My only other income is a $10k scholarship (which counts as unearned income, I believe), which I used entirely for room and board.

My parents paid my tuition with 529 funds.  They entered that info (1098-T) on their tax form.

[fwick]

Yes, I entered wages from a W-2. 

I cannot preview the 1040 form until I pay, right? And TT wants me to upgrade from Free to Deluxe and pay $49 because of the claim on Excess Contribution. So it's a bit of a Catch-22, I think. TT won't show me why I made an excess contribution until I upgrade, but I don't want to upgrade until I understand why an upgrade is necessary.

[VolvoGirl]

Yes you can preview the 1040 before you pay any fees and you should always review it before you file.

You can preview the 1040

https://ttlc.intuit.com/community/accessing/help/how-do-i-preview-my-turbotax-online-return-before-f...

[fwick]

> How much is showing up on your 1040 line 1 for Wages?  

On the dotted line to the left of the box it says SCH 10000.
Inside the box on Line 1, it says 14,9XX.
This amount is scholarship (10k) plus summer job.

[FangxiaL]

Based on the situation you described, I don't believe you have excess contribution. It is a really smart move to contribute $3,000 to your Roth IRA. You do qualify for the saver's credit, though. I think that  is why TurboTax suggests you upgrade to Deluxe version. 

Here is what you can do:

• Without upgrading, see how much is your tax liability (not balance, but tax based on your taxable income);
• Now upgrading TT to Deluxe, see how much is your refund. The saver's credit should wipe out any tax you owe on taxable income.
• Compare the two result and make your decision. 

You are not required to claim the credit or enter your Roth IRA contribution into TurboTax. If you just want to file for free, simply remove the Roth IRA contribution you entered. 

@fwick

[fwick]

No. I am not eligible for the saver's credit because I am a claimed as a dependent and I am a student. See https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-save... 

> You are not required to claim the credit or enter your Roth IRA contribution into TurboTax. If you just want to file for free, simply remove the Roth IRA contribution you entered. 

This sounds like a good idea. I returned to the IRA section "Deduction and Credits"-->"Traditional and Roth IRA Contributions".  The first page says "Select the kind of IRAs you own and will contribute to for 2021.

Seems like I have two options:

• Click "Roth IRA" and enter $0 for amount contributed. I tried this and got the same message.
  

  To accurately complete your taxes, you need to upgrade to TurboTax Deluxe

  Why do I need to upgrade?

  You have Additional Tax on Excess Contributions or Deductions (Form 5329).

  TurboTax Free Edition does not cover this situation
   
• Click "Neither of these."  I tried this, clicked through the Fed and State reviews, and again got exactly the same message. 

Any other ideas?

[JulieS]

The program will read $0 as a contribution. Try this again, but leave the box blank.

If that doesn't work you may need to use the return to Free tool.

Just to summarize, you are allowed to contribute up to $5000 because that is the amount of your wages.

You are not required to report your Roth contribution on your tax return and doing so will not get you the Saver's credit, because you are both a dependent and a student. 

You can return to Free by following these directions:

1. Click on Tax Tools near the bottom of the left side menu.
2. All the way at the bottom, select Return to Free.
3. The next screen explains the program will keep most of your information, but you may need to re-enter some of it. 
4. Once you confirm that is what you want to do, you will be taken back to the beginning of the return and you will need to review and possibly re-enter some of your information.

[frwick]

> The program will read $0 as a contribution. Try this again, but leave the box blank.

Nope. I left the box blank and get the same demand to upgrade due to excessive contrib.

> You can return to Free by following these directions:

1. Click on Tax Tools near the bottom of the left side menu.
2. All the way at the bottom, select Return to Free.

Actually, I think I am already in the Free Edition, since I refused to upgrade. For me, the left-side menu has Tax Tools and then  Clear and Start Over. As a last-ditch effort, I thought I would click Clear and Start Over. However, when I did so, I get a message that says 

You cannot clear your return.

Once you register your tax return, or pay any TurboTax fees, we can no longer clear and start over.

I am sure I am getting this message because TT wouldn't allow me to View my return (Print Center --> Print or View) until I had registered. I registered so I could answer the questions like "what is on Line 1".

IMO, registering was a bad decision. Now I am stuck. I can't go back (clear) and I won't go forward (upgrade). I give up.