amending 2019 tax return for Roth IRA excess contribution

[Anonymous]

My wife and I did not enter the amount that was contributed to Roth IRA in 2019 when filing the 2019 tax return, and now I am trying to amend my 2019 tax return due to excess contributions of  $240 for both my wife and myself.   I am amending the 2019 tax return with Turbotax 2019, and I have 3 questions:

1) we were able to get to the screen where Turbotax alarms us of possible penalties and expects us to make a withdraw.  On the same page Turbotax asks us how much contributions have been withdrawn before the due date of the 2019 return.  Since we have not withdrawn any till today, we entered "0".  Shall we enter "0" for this page?

2) i noticed that Turbotax automatically generated and filled out form 5329 for both my wife and myself.  At the very end Turbotax also correctly concluded that there are $28 due for federal tax.  It seems all I need to do is to mail the amended federal and state tax return out.  But how do I pay for the penalties of $28?  The 5329 form does not ask for payment information (bank account, credit card, etc)

3) Turbotax asked for the value of my Roth IRA's on Dec 31, 2019.  Shall I enter just the principals that I have contributed (115,000 with 5,500 from 2018 contribution and 6,000 from 2019 contribution), or shall I enter the true value in my Roth IRA account, which is likely to be more than 115,000 due to earnings, or it does not matter at all.

Thank you very much.

[DanaB27]

1. Yes, since you did not withdraw that excess contribution by the due date of the 2019 return you will enter $0.
2. You can send a check as payment with your tax return: Please see IRS Pay by Check or Money Order for details. Or see these payment options: IRS Paying Your Taxes.
3. Yes, you will enter the true value of your Roth IRA on Dec 31, 2019 (contributions and earnings).

[Anonymous]

Thank you very much.  3 fellow-up questions:

1) Shall I withdraw the excess amount that was contributed for 2019 before or after filing the amended 2019 tax return?  If I need to withdraw before filing the amended tax return, where and how shall I enter the withdraw in the amended 2019 tax return?  If I can withdraw the excess amount after filing the amended 2019 tax return:

After the amendment is filed with a check to pay for the full amount of the penalty, I am going to call my Roth IRA custodian to withdraw the excess amount that was contributed for 2019 in mid-Febuary 2021.   I am planning to file my tax return for 2020 before April 15th 2021.

2) For my tax return filing for 2020, shall I mention the excess contribution to the 2019 Roth IRA (and if so, where and how to enter it in Turbotax 2020)?  Since the excess contribution happened for 2019 and I will withdraw the excess amount by mid-February 2021, do I need to pay the 6% penalty once or twice?  

3) For my tax return filing for 2020, shall I mention the withdrawn of the excess amount (and if so, where and how to enter it in Turbotax 2020)?  I was informed by my Roth IRA custodian that I will not receive the 1099-r describing the withdraw until late 2021, is tax return for 2021 the right place to include that 1099-r?

Thank you very much.

[DanaB27]

1) You can withdraw the excess now and this will help you to avoid to have the penalty again on your 2020 tax return. You will not enter the withdraw of excess contribution on your 2019 amended tax return.

2) When you are working on your 2020 tax return in the IRA contribution section, TurboTax will ask you about excess contribution in prior years. If you withdraw the amount by the due date of your 2020 tax return then do not enter anything here. Since you are withdrawing the contribution by the due date you will not have to pay the penalty twice, you will only pay it for 2019.

3) Yes, you will get a 1099-R 2021 in 2022. If you have to enter it in 2021 or 2020 will depend on the code in box 7. If it is P and J then it will have to be included on your 2020 tax return and you will have to amend your 2020 tax return. If it is code 8 and J then it will be included on your 2021 tax return. If taxes are withheld then these will have to be entered on your 2021 return as well, no matter what code is in box 7.

[Anonymous]

Dear DanaB27,

Thanks a lot.  That is super helpful.  Your help on this is highly appreciated.

Would you please elaborate on your answer to my last question "If taxes are withheld then these will have to be entered on your 2021 return as well, no matter what code is in box 7."?  What does it mean that the taxes are withheld and how can I find out if the taxes are withheld or not?

Thanks a again.

[DanaB27]

You can ask your bank. Also, if taxes are withheld then this will show up in box 4 for federal taxes and box 14 for state taxes on the 1099-R that you will receive. The withheld taxes will have to be entered on your 2021 tax return to get credit for the taxes already paid.