topic Re: Incorrectly contributed to IRA in Get your taxes done using TurboTax

Incorrectly contributed to IRA

cdibuff — Thu, 14 Oct 2021 01:23:33 GMT

This is a followup question. In May when I cursorily filed my extension for 2020 taxes, turbotax determines I was eligibly for Self employment taxes as it incorrectly interpreted the rents received reported in box 1 of 1099 to be self employment income. In reality it should get reported with other schedule E rental income (a separate question posted for that). I was able to contribute 6,000 to a traditional IRA, which I did prior to the May 15th deadline.

But now, after this correction and prior to the October 15th tax extension date I realize that contribution to be invalid. How can I recover/reverse this action without penalty? I had opened a new IRA account with ETrade and had contributed the $6,000 into it.

Any help will be greatly appreciated!

Re: Incorrectly contributed to IRA

Mike9241 — Thu, 14 Oct 2021 05:51:39 GMT

contact the custodian to remove the excess. if removed by 10/15/2021 there is no 6% penalty for excess contribution. income earned on it must be included on your 2020 return and is subject to a 10% penalty if you are under 59 1/2

Re: Incorrectly contributed to IRA

cdibuff — Thu, 14 Oct 2021 06:07:32 GMT

Thank you for your reply l. Do just to be clear since the snount held in the IRA wax 6000 and wax never invested and still us 6000 I would not be subjected to the 10% penalty? Right?