Form 5329 line 19 calculation error?

[bmsouth]

If I'm reading this form's instructions correctly, Turbotax doesn't appear to calculate this line correctly. The instructions for the form state that if you've contributed less than your maximum possible contribution to a Roth IRA in a given year, you should be entering the difference between what you could've contributed and what you did contribute in line 19.

Here's an example. I contributed nothing to a given Roth IRA in 2021. I could've contributed up to $6000 in 2021. The instructions say for line 19: "If you contributed less to your Roth IRAs for 2021 than your contribution limit for Roth IRAs, enter the difference." That means that line 19 should be the difference between those two numbers, which is $6000. Turbotax wants the value for that line to be $0, possibly because it was never actually asked how much I contributed to Roth IRAs last year. I can't edit line 19 in the form. I tried to check the IRA Contributions Worksheet, but there's this line 26 there for Excess Roth IRA contribution credits and no instructions I can discover as to what this credit represents, so I don't know what the result of the worksheet should be.

I'd like to get this line correct (although I'll need to amend returns to correct it now) because I think it should be reducing a previous year's excess contribution via line 19 so I'm not dragging that value along from year to year on this form (shows up on line 18 this year because it's copied from line 24 last year) which is causing me to have a tax penalty every year.  If line 19 were $6000 as I think it should be, line 22 would end up being $0 and I would owe no penalty.

[DanaB27 · Accepted solution]

Please be aware, TurboTax will put $6,000 on line 19 if you are allowed to make a Roth contribution for 2021.

For 2021 the total contributions you make each year to all of your traditional IRAs  and Roth IRAs can't be more than:

• $6,000 ($7,000 if you're age 50 or older), or
• If less, your taxable compensation for the year

Also, your Roth IRA contribution may be limited based on your filing status and income. Please see 2021 - Amount of Roth IRA Contributions You Can Make for 2021

If you have enough taxable compensation and the income limit doesn't apply then please go back to the IRA contribution interview to review your entries:

1. Click on "Search" on the top right and type “IRA contributions” 
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”

[bmsouth]

Oh, I think I see. If I didn't make at least $6000 in compensation in a given year, then I couldn't have contributed up to $6000 in that year, so that form line 19 is zero for that reason. So that means that I'll continue to be penalized for that excess contribution every year until I distribute it out of the Roth or make enough compensation in a given year such that my allowable contribution for that year is at least as much as the excess contribution from several years ago. I'm not sure how a rollover got considered as an excess contribution tax-wise since the rollover was the only money that went into this particular Roth IRA, but that's really outside the scope of my question. I think I'm going to have to get some outside help to clear up my actual tax situation, since I'm not going to take a Roth distribution without knowing what all that entails, but you have answered my questions about whether or not the software is working correctly. It would have been helpful if the IRS forms included the information you gave me with the contribution tables, but that's out of Intuit's hands and maybe I just overlooked it anyhow.

That's all I needed. Thanks for your help.

[DawnC]

Here are the contribution limit charts from the IRS for future tax purposes.   Rollovers do not count towards your contribution limits.