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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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I've received form 1099-R return of an excess Roth IRA

Customer Question

I've received form 1099-R for the return of an excess Roth IRA contribution made in 2014. The excess contribution was removed in March of 2015 prior to filing my 2014 taxes. However, I did not include this anywhere on my 2014 tax return.
Does this mean I need to file an amended 2014 tax return? Or do I list this on my 2015 tax return in some manner?
Form 1099-R indicates that both federal and state taxes were withheld based on the gain on the original contribution amount that was removed in March 2015.
Submitted: 8 months ago.
Category: Tax
Expert:  Lev replied 8 months ago.

In general - A 6% excise tax applies to any excess contribution to a Roth IRA.
However - For purposes of determining excess contributions, any contribution that is withdrawn on or before the due date (including extensions) for filing your tax return for the year is treated as an amount not contributed. This treatment only applies if any earnings on the contributions are also withdrawn.

The earnings are considered earned and received in the year the excess contribution was made.

Customer: replied 8 months ago.
if the excess contribution was made in 2014, does that mean I'll need to file an amended 2014 tax return?
Expert:  Lev replied 8 months ago.

if the excess contribution was made FOR 2014 and corrective distribution was made BEFORE the due date of 2014 tax return - then

- distribution of the original contribution is tax free and penalty free.

- distribution of earning should be reported on 2014 tax return and will be subject to income tax and 10% penalty.

So - if that income was NOT reported on 2014 tax return - then yes - 2014 tax return should be amended and corrected.

Customer: replied 8 months ago.
I've just verified there was actually a loss as opposed to a gain on the original contribution amount at the time it was removed. The loss amount was $90.69. Federal and state taxes were withheld from the gross distribution. Do I still need to file an amended 2014 return considering there was a loss?
Expert:  Lev replied 8 months ago.

If there were NO distribution of earning - you would not be required to report any income on 2014 tax return.

So amendment is not required.

However - if taxes were withheld - you might want to claim a credit for that amount - and that would be claimed on 2014 tax return.

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