topic IRA contribution in Deductions & credits

IRA contribution

youssefelramy — Sun, 21 Mar 2021 00:04:05 GMT

Hello, in 2020 I contributed $2300 to my traditional IRA account, I don’t want to pay taxes on them now, when I put the 2300 in turbotax I’m only getting $10 return from the State, when I put that I got distribution for $2200 I paid $220 in taxes, it looks like something wrong is going on, can someone help please. thank you! (I hope it the question is clear)

Re: IRA contribution

macuser_22 — Sun, 21 Mar 2021 00:08:24 GMT

@youssefelramy wrote:

Hello, in 2020 I contributed $2300 to my traditional IRA account, I don’t want to pay taxes on them now, when I put the 2300 in turbotax I’m only getting $10 return from the State, when I put that I got distribution for $2200 I paid $220 in taxes, it looks like something wrong is going on, can someone help please. thank you! (I hope it the question is clear)

Do you have a 1099-R for the distribution? What code is in box 7?

Re: IRA contribution

youssefelramy — Sun, 21 Mar 2021 00:11:06 GMT

Hello, thanks for replying, it’s code 1

I don’t think there’s an issue with the distribution and tax on it but it’s when I put how much I contributed to my ira tax are not going down

Re: IRA contribution

macuser_22 — Sun, 21 Mar 2021 00:24:27 GMT

That is a normal distribution for under age 59 1/2 and not a return of contribution that would have a code N.

If you told the IRA custodian that you wanted a return of contributions by the due date of the 2020 tax return (May 17), then they should have issued a non-taxable 1099-R with a code N in box 7, the amount returned in box 1 and any earnings on the returned amount in box 2a.

Contact the IRA custodian for a corrected 1099-R if they made an error.

Re: IRA contribution

youssefelramy — Sun, 21 Mar 2021 00:39:31 GMT

distribution was with chase, I got 1099-r from them, at the end of 2020 I opened an account with Vanguard, and deposited for 2020 $2300 the issue I’m asking about is with the tax break on the 2300, I have a traditional IRA don’t want to pay taxes on them now, so that means when I include this number as a contribution for ira there should be a tax deduction of 2300 reflected right? if yes that’s not happening

Re: IRA contribution

macuser_22 — Sun, 21 Mar 2021 00:54:39 GMT

@youssefelramy wrote:

distribution was with chase, I got 1099-r from them, at the end of 2020 I opened an account with Vanguard, and deposited for 2020 $2300 the issue I’m asking about is with the tax break on the 2300, I have a traditional IRA don’t want to pay taxes on them now, so that means when I include this number as a contribution for ira there should be a tax deduction of 2300 reflected right? if yes that’s not happening

You are mixing apples and oranges.

Your Chase distribution has nothing to do with a new IRA contribution. As long as you have taxable compensation (money you worked for - W-2 or net self-employed income) at least as much as $2,300 then that can be a NEW IRA contribution that can be deductible if you qualify for a deduction.

Enter IRA contributions here:
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),
Retirement & Investments,
Traditional & Roth IRA contribution.

OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.

However, your Chase distribution is fully taxable. If you just wanted to change trustees you should have just had Chase make a trustee-to-trustee transfer of the funds to Vanguard and you would not report anything at all.

Unfortunately it is too late to do that and you will loose money on the deal since a IRA deduction just reduces you taxable income and is not a dollar-for-dollar refund.