Question

I should pay no tax on excess contributions if I didn't really contribute, right?

Forum|Forum|1 year ago
March 28, 2025
1 reply
0 views

I don't think I should be paying 6% additional tax because the excess contributions were a mistake I immediately did a corrective disbursement to reverse. How do I get that represented on my return?

I made a $7700 Roth contribution and a $300 trad IRA contribution earlier this month for 2024, then reversed both. I already got help creating a 1099-R form and manually entering the corrections: (https://ttlc.intuit.com/community/tax-credits-deductions/... )

TurboTax Self Employed Online

M

MAK70

If you did not go back to the IRA contribution section and indicate that you withdrew the excess contribution, TurboTax will calculate the penalty and include the 5329. Go back to the section in Deductions & Credits and make sure you are not showing the contributions.

fanfare

you can't "reverse" it without the custodians help. the custodian has to calculate any earnings, report the earnings to IRS, send them back also and you pay tax on that.

@macrocephalia

A distribution on your own is just taking money from an IRA which is taxed and penalized, which is not pretty.

M

macrocephaliaAuthor

@fanfare Broker/custodian did the disbursements to undo the contributions. There were no earnings on them as it was barely in there. That shouldn't mean tax or penalty, right? (Hence my confusion over this 6%)