My TT H&B 2021 doesn't appear to be calculating correctly.
Timeline:
IRS says 2021 filing is not correct.
In TT, the IRA Contribution worksheet line 25 states to "Enter any contribution included in Line 24 (i.e., initial contribution amount) withdrawn before the due date of the tax return. Due to the Loss of Principal the amount is less than the original contribution which TT then interprets as excess contribution remaining on Line 27.
How does one correctly account for the loss of principal?
You'll need to sign in or create an account to connect with an expert.
Don't confuse the amount distributed with the amount of contribution returned. They are not the same. The amount of 2021 contribution returned was the amount contributed despite the amount distributed being less that the amount contributed, leaving no excess contribution to be reported on the 2021 Form 5329.
For a proper return of contribution, the 2022 Form 1099-R reporting this distribution should have had codes J and P in box 7, the amount distributed reported box 1 and $0 in box 2a. Your 2021 tax return was required to include and explanation statement describing that the amount distributed constituted the return of the entire contribution adjusted for investment loss. Absent that explanation, the IRS has no way to know how much of the contribution was returned.
Don't confuse the amount distributed with the amount of contribution returned. They are not the same. The amount of 2021 contribution returned was the amount contributed despite the amount distributed being less that the amount contributed, leaving no excess contribution to be reported on the 2021 Form 5329.
For a proper return of contribution, the 2022 Form 1099-R reporting this distribution should have had codes J and P in box 7, the amount distributed reported box 1 and $0 in box 2a. Your 2021 tax return was required to include and explanation statement describing that the amount distributed constituted the return of the entire contribution adjusted for investment loss. Absent that explanation, the IRS has no way to know how much of the contribution was returned.
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
fiona5
Level 2
gxt1
Level 2
msv1
Level 2
tocguy
Level 3
SoCalRetiree
Level 1
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.