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Why would my Federal Refund go down after entering a planned Roth contribution for tax year 2018 ? The refund is reduced by $6 for every $100 entered.
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Why would my Federal Refund go down after entering a planned Roth contribution for tax year 2018 ? The refund is reduced by $6 for every $100 entered.
Please be aware that your Roth IRA contribution might be limited based on your filing status and income. If this resulted in an excess contribution the penalty is 6%. Please see 2018 - Amount of Roth IRA Contributions You Can Make for 2018 for the contribution limits to a Roth IRA.
Excess contributions are taxed at 6% per year as long as the excess amounts remain in the IRA. The tax can’t be more than 6% of the combined value of all your IRAs as of the end of the tax year.
To avoid the excess contributions tax:
- withdraw the excess contributions from your IRA by the due date of your individual income tax return (including extensions); and
- withdraw any income earned on the excess contribution.