Correcting Old Tax Filing Error

[yakers]

Looking for the simplest approach to correcting a very old tax filing error. In 2018 I made a $100 over contribution to a Roth IRA. I did notice this at the time and had the funds withdrawn and the 1099-R (received) reflects that, however I evidently didn’t notice that I had coded this incorrectly in turbotax. So each year I have had a $6 penalty. No big deal, not financially worth fixing but its irritating and not only will be $6 forever but I intended to leave the Roth as an inheritance and don’t want to leave any aggravation.
So do I need to file revised 2018,2019,2020, and yes, 2021 returns? Is there a way to adjust it in the next 2022 tax filing? I don't care to get any past money back.

 

[SecondCor521]

You don't need to amend because you overpaid and you don't care. The IRS doesn't care if you overpay them.

You probably are past the limit to amend 2018 anyway (it's three years from date of filing or due date, whichever is later -- I think).

In 2022, if you don't max out your Roth IRA contribution, you could see if you're able to properly enter a value on line 19 of Form 5329. That'd probably be the cleanest and easiest way to straighten it out going forward.

 

[cathy63]

When you use TurboTax for your 2022 return, go to Deductions & Credits > Retirement and Investments > Traditional and Roth IRA Contributions.

On the next screen, check the box that says you own a Roth IRA. TTax will then ask you a bunch of questions about whether you contributed this year and if you want it to track your basis. Answer those accurately. When it gets to the question about excess contributions in a prior year, say No or enter $0, whichever is appropriate.

You can test this out on your 2021 return even though you've already filed to see if it would have removed the penalty.

 

[SecondCor521]

When you use TurboTax for your 2022 return, go to Deductions & Credits > Retirement and Investments > Traditional and Roth IRA Contributions.

On the next screen, check the box that says you own a Roth IRA. TTax will then ask you a bunch of questions about whether you contributed this year and if you want it to track your basis. Answer those accurately. When it gets to the question about excess contributions in a prior year, say No or enter $0, whichever is appropriate.

You can test this out on your 2021 return even though you've already filed to see if it would have removed the penalty.

I thought about that approach. But line 18 of Form 5329 is a carry forward from the previous year, so the IRS computers might try to match OP's 2022 Form line 18 (which would be $0 in your example) with 2021's Form 5329 line 24 (which presumably has $100 from OP's description).

(Probably not, but that's why I suggested my approach.)

 

[yakers]

When you use TurboTax for your 2022 return, go to Deductions & Credits > Retirement and Investments > Traditional and Roth IRA Contributions.

On the next screen, check the box that says you own a Roth IRA. TTax will then ask you a bunch of questions about whether you contributed this year and if you want it to track your basis. Answer those accurately. When it gets to the question about excess contributions in a prior year, say No or enter $0, whichever is appropriate.

You can test this out on your 2021 return even though you've already filed to see if it would have removed the penalty.

Will try that in 2022 return. Worst that can happen is IRS xdoesn't like it, and I can send them a very old 1099 that will support my position, might work, not much to lose and if it doesn't my situation has not changed.

thank you

 

[cathy63]

Well, you can still amend 2018 returns for one more week and plenty of time for the others, so that's another option. It's easy to do if you still have the old TTax software around. I personally think the IRS is pretty unlikely to notice this and if they do they should accept an explanatory letter with a copy of the 1099-R if you send it in.

Here's a long thread in the TTax community forums about what to do if you do want to try to fix it. https://ttlc.intuit.com/community/taxes/discussion/reporting-excess-roth-ira-contribution/00/1900728