turboxtax desktop. excessive 2021 roth contribution

[helloworld1314]

Hi if someone can help me on the step of where I put in the value for reporting excess contribution amount which I exceeded 1$1000 for roth I contributed for 2021 I just discovered when I received the form 5498 today.  I research that I can apply the excess toward 2022 contribution.

I made a copy of original return, opened in the app, selected to amend return, went to the IRA section, which it asked me how much I contributed in total for ROTH in 2021, I put 6000 there, then on the Federal amount changed to owning $60 bucks.

Then the next screen asked "do you have any excess roth contribution, tell us if you contributed  more to a roth than it was allowed in 2021or any previous year", I answered yes,

Which brings to to the next screen that asked "enter excess amount, Your excess Roth contribution fro prior years".   so at this step, what do I put in there? zero or 1000?   It says previous year, so its not the extra 1k for 2021 ? 

Follow up question is, what do I put in my 2022 tax when comes to filing that if i already corrected by applying the excess toward 2022?

thank you

[dmertz · Accepted solution]

"Previous year" in this context means prior to 2021; TurboTax is asking how much should appear on 2021 Form 5329 line 18.  Assuming that you had no excess contribution before 2021, enter zero.

If you choose to pay the $60 excess contribution penalty for 2021 and apply the $1,000 excess as part of your 2022 Roth IRA contribution, 2022 TurboTax will ask how much to apply.  Presumably you would be applying all $1,000 to your 2022 contribution and that plus your other contributions will not total more than the amount permissible for 2022.  2022 TurboTax will prepare 2022 Form 5329 to show that the $1,000 excess carried in from 2021 is reduced to zero.

Note that if you filed your 2021 tax return or requested a filing extension by April 18, 2022, you have until October 15, 2022 to explicitly request that the Roth IRA custodian make a return of the $1,000 excess contribution to eliminate the excess for 2021 and avoid the $60 excess contribution penalty.  The Roth IRA custodian will then distribute $1,000 adjusted for any investment gain or loss.  If there was a gain, the gain will be subject to income tax and, if you are under age 59½ at the time of the return of contribution, an early-distribution penalty.  (If you have substantial investment gains on the $1,000, say 30% or more, it might make sense to do as you asked about and pay the $60 penalty instead of obtaining a return of contribution.)

[helloworld1314]

Thank you for the reply.  So I have to wait for the 2022 tax filing time to actually have the option in the 2022 turbor tax to say apply the excess to 2022 year, the amaended return done in 2021 only let you say I owe $60 if I decide to leave it there and "deal with it in 2022" if after 2021 deadline or extension deadline.  correct?

[dmertz]

Correct.