excess traditional IRA contribution but not deposited

Forum|Forum|1 year ago
March 26, 2025
1 reply
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I used TT to efile 2024 taxes. I entered Simple IRA contribution and Traditional IRA contribution. TT reviewed, showed no alerts or warnings, and efiled. The Simple was tiny (about $1000, all of my self employed income. I am self employed and retired) and Trad IRA a bit less. I live off social security. Everything I have read indicates that it is ok to take both, they are separate if high income isn't a factor. TT didn't object.

A couple of weeks later, I am about to send the Traditional IRA money to brokerage and wanted to check the tax form to make sure of the amount. I was shocked to see that TT filed it as non-deductible and an excess contribution. Plus there was a 6% tax on the excess contribution. Again, No warning from TT about this.

IRS just deposited my refund, less than what TT promised, IRS saying that there was an error in social security calculations.

What is the best way to deal with this situation? At this point I am not inclined to argue with IRS about the Social Security calculation. But what about the alleged excess traditional IRA contribution?

What if I just don't deposit the funds? Will the issue disappear? Will the 6% tax be returned?

Or deposit the funds and withdraw the same day to get a1099-R return of excess.

Should I not deposit the funds, but file an amended 1099X showing no traditional IRA contribution?

TurboTax Home & Biz Windows

MAK70

If you were not qualified to make the contribution, you can choose not to make the contribution. You will have to amend your return to correct the excess contribution penalty- which is probably a good idea. You can make all the corrections and then it should match what the IRS calculated for the taxable social security.

If you have questions as you do the amendment, please let us know.