topic in Deductions & credits

I should pay no tax on excess contributions if I didn't really contribute, right?

macrocephalia — Fri, 28 Mar 2025 18:08:08 GMT

I don't think I should be paying 6% additional tax because the excess contributions were a mistake I immediately did a corrective disbursement to reverse. How do I get that represented on my return?

I made a $7700 Roth contribution and a $300 trad IRA contribution earlier this month for 2024, then reversed both. I already got help creating a 1099-R form and manually entering the corrections: (https://ttlc.intuit.com/community/tax-credits-deductions/... )

Re: I should pay no tax on excess contributions if I didn't really contribute

MaryK4 — Fri, 28 Mar 2025 21:11:45 GMT

If you did not go back to the IRA contribution section and indicate that you withdrew the excess contribution, TurboTax will calculate the penalty and include the 5329. Go back to the section in Deductions & Credits and make sure you are not showing the contributions.

Re: I should pay no tax on excess contributions if I didn't really contribute

fanfare — Fri, 28 Mar 2025 21:49:45 GMT

you can't "reverse" it without the custodians help. the custodian has to calculate any earnings, report the earnings to IRS, send them back also and you pay tax on that.

@macrocephalia

A distribution on your own is just taking money from an IRA which is taxed and penalized, which is not pretty.

Re: I should pay no tax on excess contributions if I didn't really contribute

macrocephalia — Sun, 30 Mar 2025 01:48:19 GMT

@MaryK4 I think I indicated that i withdrew the excess contribution with the manual 1099-R, no? TurboTax shows a tax, but I don't see a penalty. Is the problem that it shows a disbursement but now there's no contribution?

Re: I should pay no tax on excess contributions if I didn't really contribute

macrocephalia — Sun, 30 Mar 2025 01:47:51 GMT

@fanfare Broker/custodian did the disbursements to undo the contributions. There were no earnings on them as it was barely in there. That shouldn't mean tax or penalty, right? (Hence my confusion over this 6%)

Re: I should pay no tax on excess contributions if I didn't really contribute

fanfare — Sun, 30 Mar 2025 03:51:23 GMT

If custodian sent you rmoney back and earnings were zero. you can ignore this on your tax return.

It is as if it never happened.

There is nothing to do. (you will get a 1099-R next year which also can be ignored.)

@macrocephalia

Re: I should pay no tax on excess contributions if I didn't really contribute

DanaB27 — Sun, 30 Mar 2025 17:53:02 GMT

To confirm you did not have an excess contribution for 2023? If that is correct then please remove the entry on the the "Enter Excess Contributions" screen:

Click on "Search" on the top right and type “IRA contributions”
Click on “Jump to IRA contributions"
Select “Roth IRA”
On the "Enter Excess Contributions" screen delete the entry.

@macrocephalia

Re: I should pay no tax on excess contributions if I didn't really contribute

macrocephalia — Mon, 31 Mar 2025 01:03:15 GMT

@fanfare oh?! Sounds like I should just remove any reference to the contributions then? That's great

Re: I should pay no tax on excess contributions if I didn't really contribute

macrocephalia — Mon, 31 Mar 2025 01:05:46 GMT

@DanaB27 correct, if "did not have an excess contribution" is the same as putting it in then taking it out again right away. Thank you for the instructions—seems like I can just delete all the IRA and Roth entries and be good to go. Thanks!

macrocephalia — Tue, 01 Apr 2025 23:30:39 GMT

Re: I should pay no tax on excess contributions if I didn't really contribute

VolvoGirl — Tue, 01 Apr 2025 23:28:31 GMT

Try going to IRA contributions under

Federal On left

Deductions and Credits

Then scroll down to Retirement and Investments

Traditional and ROTH IRA Contributions - Click the Start or Update button

Re: I should pay no tax on excess contributions if I didn't really contribute

macrocephalia — Tue, 01 Apr 2025 23:37:02 GMT

@VolvoGirl Thank you! Ok this allows me to "none of the above" my contributions, but when I finish, it shows -$8000 so I must have to access manually somewhere else?

—— UPDATE ——

I found a tool to delete two IRA forms, so I tried that