6% fee

[pony2105]

I'm 58 and converted 15000 to a roth last year, have AGI of 79000. Why am I being charged a 6% excess contribution fee on a 8000 roth contribution? If I enter the 8000 for my wife, there is no additional tax. This doesn't make any sense that the fee is only charged if I make the the roth contribution.

[MindyB]

It is likely that you are missing the basis of the nondeductible traditional IRA that was from prior years, since $15,000 is more than the allowable contribution in one year. Please note that if you are converting a Traditional IRA that you deducted in the past, there is going to be tax on this amount (but not the 6% penalty) since it was never taxed before. If the IRA was a nondeductible Traditional IRA, make sure you enter the amount you contributed to the Traditional IRA in the current year and prior year(s).

1. Go to Deductions & Credits
2. On the Your tax break screen, locate and select the Retirement and Investments section, then select Start or Revisit next to Traditional IRA and Roth IRA.
3. Check the box for traditional IRA.
4. Continue and enter the 2025 Traditional IRA contributions (pre-conversion)
5. Continue and enter the amount of nondeductible IRA contributions to your traditional IRA from 2024 or prior years on the screen Traditional IRAs where it asks for this information.

[pony2105]

I didn't make a non-deductible IRA contribution the previous year. It still shows a 6% fee even if I back out the $15,000 converted to a Roth.

[MindyB]

I would like to take a deeper look at this. However, I need a diagnostic file which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the directions below:

TurboTax Online:

1. Sign into your online account.
2. Locate the Tax Tools on the left-hand side of the screen.
3. A drop-down will appear. Select Tools
4. On the pop-up screen, click on “Share my file with agent.”
5. This will generate a message that a diagnostic file gets sanitized and transmitted to us.
6. Please provide the Token Number that was generated in the response.

TurboTax Desktop/Download Versions:

1. Open your return.
2. Click the Online tab in the black bar across the top of TurboTax and select “Send Tax File to Agent” *
3. This will generate a message that a diagnostic copy will be created.  Click on OK and the tax file will be sanitized and transmitted to us.
4. Please provide the Token Number  (including the dash) that was generated in the response.

*(If using a MAC, go to the menu at the top of the screen, select Help, then, “Send Tax File to Agent”)

[VolvoGirl]

Did you make the 8,000 contribution in addition to the 15,000 conversion?   Did you also make a contribution to a Traditional IRA?   And make sure your contribution is assigned to you.   Maybe it thinks it is for your wife.  

[pony2105]

My token number is 1338207. I entered my information on free taxusa.com and the numbers were the same I had a refund of $29. However when I entered my Roth contribution of $8,000 it was fine on their site but your site shows I would owe $451 for federal taxes. Something isn't right with your site it's not recognized in my 8,000 Roth contribution or it is and then and it's charging me a fee of 6%. I would like to use TurboTax to file my taxes because I've used your company for 10 years but I want to make sure the numbers are right.

[pony2105]

My token number is 1338207. I entered my information on free taxusa.com and the numbers were the same I had a refund of $29. However when I entered my Roth contribution of $8,000 it was fine on their site but your site shows I would owe $451 for federal taxes. Something isn't right with your site it's not recognized in my 8,000 Roth contribution or it is and then and it's charging me a fee of 6%. I would like to use TurboTax to file my taxes because I've used your company for 10 years but I want to make sure the numbers are right.

[MindyB]

@pony2105 Thank you for providing your token.  I have taken a look at your return. The 6% tax is being contributed because line 18 on form 5329 is filled in with $8,000.  Line 18 says: Enter your excess contributions from line 24 of your 2024 Form 5329

Is that correct?  If so, the 6% applies.

If not, as I suspect is the case, you'll need to remove the excess contributions as of 12/31/24. In Desktop, go to Forms in the top right, Form 5329-T, and enter zero into line 18.  

If you are using TurboTax Online, you will need to go through the interview to update this.  The $8,000 may have gotten stuck in the background if you don't see it, so I'd suggest the following: 

• Go to Traditional and Roth IRA Contributions
• Continue through the interview and you'll see a screen that says Roth IRAs, Did you contribute more to a Roth IRA than was allowed in 2024 or any previous year? If it says no, switch it to yes, and enter $1, and then remove it.  That might cause a reset.
• If it already said yes, continue to see the value amount and remove it.  You can backtrack to then say no.