First time filing - what do I need to include?

Forum|Forum|5 years ago
February 11, 2021
1 reply
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Found out I made ineligible 2020 Roth contributions when I didn't have any earned income. So in February of 2021, I requested Vanguard to remove my excess plus earnings. I don't have any other substantial income besides around $60 in interest and dividends, so the 10% penalty on my earnings is my only tax liability. I can just file Form 5329 by itself, correct?

I was a full-time resident of NY, so would I also have to file a NY state return since I'm required to file Form 5329 federally?

I also received Form 1098-T showing scholarships > expenses. Do I report this? I've gotten responses on my other discussion telling me that I do not include it in my own personal return since I will be claimed by my parents.

ThomasM125

Level 15

If you made the contribution in 2020 for 2020 and removed it by the due date of your tax return (April 15, 2021) then you wouldn't be treated as having made the contribution so there wouldn't be any penalties.

Your parents would claim the form 1098-T on their tax return to see if they qualify for an education credit, unless the scholarship income on it was more than the education expenses, in which case you would report it on your tax return, as it may be taxable income to you.

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hchan32Author

Level 4

@ThomasM125

Thank you for your response. I think there may have been some miscommunication.

I made the contribution in 2020
I removed the contribution plus earnings in February 2021 (before the April 15th filing due date)
I made around $275 in earnings, and will therefore be taxed 10% as an early withdrawal penalty because I am under age 59 1/2
Form 5329 will need to be filed to report the additional tax
I have a Form 1098-T showing scholarships/grants > qualified expenses by around $6k
Do I report the excess scholarships/grants as income?
My Form 1098-Ts from prior years also showed scholarships/grants > qualified expenses by around $4k, but my parent's tax preparer did not report or file anything
I am confused because the excess scholarships/grants were not reported in prior years, so will I need to report it?

DaveF1006

Level 15

Yes, if your prior year's 1098-T show an excess scholarship amounts (Box 5 is greater than Box1) on the 1098-T, you will need to prepare amendments for each of those years to report the prior year's excess scholarship amounts. This is income that was unreported.

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