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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
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Experience:  10 years experience
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A taxpayer is refunded a Roth contribution she inadvertently

Customer Question

A taxpayer is refunded a Roth contribution she inadvertently made prior to filing her tax return. The 5,500 she contributed lost money & the amount of the check she received was 4,952. Is the difference of 548 (5,500 & 4,952) treated as a loss on her 1040 tax return?
Submitted: 11 months ago.
Category: Tax
Expert:  Lane replied 11 months ago.

Hi Scott. Lane here.

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What was the reason she was refunded the money. Over the earnings limit?

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Also was this becasue of investment value difference? (or some sort of surrendr fee)?

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If this is simply becasue the after tax investment was made at a value of 5500 and the redenption was done when the value was 4952, then yes, this is a capital loss.

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But I think these ae imprtant questions.

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IF tbis was for eligibility issues, she essentially never MADE a Roth contribution.