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Level 3
posted Feb 28, 2022 9:39:38 AM

When I put that I am contributing to a ROTH IRA, my tax liability goes up.

When I put that I am contributing to a ROTH IRA, my tax liability goes up.   Why?

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1 Replies
Expert Alumni
Feb 28, 2022 10:15:52 AM

If you're not qualified to make a Roth contribution or if you have excess contribution, your Tax Liability will increase when you enter Roth IRA contribution. 

For more information please check Retirement Topics - IRA Contribution Limits

 

Withdraw the excess contribution and any income it has earned to avoid the 6% excise tax. You won't owe additional federal income tax on the excess contribution you've taken out, but you may owe federal income tax on the earnings and an additional 10% federal tax on the earnings if you are under age 59½.

 The excess or unwanted IRA contribution amount, plus the net gain or loss, will need to be removed by the tax filing deadline, including an automatic six month extension.