I made an IRA deposit on April 15th, but the transfer was cancelled by the bank. Will I end up with a penalty once I amend my return?

lorriegirl — Sat, 01 Jun 2019 19:37:33 GMT

I opened an IRA account on April 15th attempting to transfer funds from my bank account. I mistakenly used an account the bank had closed, and so the transfer was rejected. I now need to file an amendment to remove the $3000 IRA contribution. Will there be a penalty? Any other ramifications?

Possibly. If you owe tax when you amend, and it is after...

Opus 17 — Sat, 01 Jun 2019 19:37:34 GMT

Possibly. If you owe tax when you amend, and it is after April 15, you may owe 0.5% penalty and 0.5% interest per month on the amount you owe. For a $5000 IRA, you probably will owe $1250 in extra tax, so $26 penalty plus interest if you amend and pay before May 15, $52 if you amend after May 15 but before June 15, and so on.

You can also request a penalty waiver if this is your first time with a penalty, but the interest can't be waived by law. Don't pay a penalty with your taxes when you amend even if Turbotax offers. Wait to get billed.

Abatement https://www.irs.gov/businesses/small-businesses-self-employed/penalty-relief-due-to-first-time-penal...

topic I made an IRA deposit on April 15th, but the transfer was cancelled by the bank. Will I end up with a penalty once I amend my return? in Retirement tax questions

I made an IRA deposit on April 15th, but the transfer was cancelled by the bank. Will I end up with a penalty once I amend my return?

Possibly. If you owe tax when you amend, and it is after...