No 8606 from H&R for Excess Contribution

Submitted by Delete User on Mon, 2018-04-09 01:45

Hi,

I had an interesting conversation sometime last year in https://irahelp.com/forum-post/29789-excess-roth-contribution-already-contributed-current-year where I’d made excess contribution but have filed the proper 2016 5329 & Amended Tax return to correct it. And that I’ve withdraw $500 from my excess Roth in 2017 Tax year.
The final post mention that I need to file my 2017’s 5329 to indicate that I don’t own excess contribution in 2017 tax year & that my 2017’s 8606 should mention that I don’t own any more excess tax to finalized everything.

But when I go through H&R (first time doing tax myself), I got the 1099-R that mention that I took a early contribution in 2017 (Roth of $500 so I can remove the excess), but I don’t see any way to indicate to do my Form 5329 or Form 8606. I’d mention it “adjustments & deduction” that I got a excess contribution of roth of $500, but I can’t file the IRA conversations (form 8606) since it say since I didn’t recharacterized anything, I don’t qualify.

Does H&R make the assumption since that I already got the $500 withdraw from Roth IRA (1099-R) that my $500 Excess Contribution in 2016 is fixed by 2017 tax year?

Ideally, I would have filled 2017’s 5329 & & 2017’s 8606 to indicate that i’d fixed my mistake via my 2016 amended tax return & the $500 excess contribution out of there via 1099-R.

Is that correct?



Submitted by Alan - IRA critic on Mon, 2018-04-09 16:52

  • I assume the 1099R for 500 is coded J in Box 7. If so, you report a regular Roth IRA distribution on Form 8606, but you have to know what to enter on line 22 for the amount of total regular Roth contributions you have made. As long as line 22 is more than 500, the distribution is tax free and your excess Roth contribution shown  on your 2016 5329 has been eliminated. But you do need to file a 2017 5329 just to show that you took the 500 distribution. That will leave you with no remaining excess amount and you will not owe the 6% excise tax for 2017. The 8606 should be easy to generate, as you are just reporting a Roth IRA distribution which should automatically generate the 8606.
  • But I can’t tell you how to generate the 2017 5329 in the HR Block program. SInce this is your first year, the program does not know you had a  500 excess carried over from 2016. You will have to figure out how to generate that 5329. Perhaps someone who uses that program will be able to help. Otherwise, call the HR Block help line which will be very busy just one week before filing date.

Submitted by Delete User on Mon, 2018-04-09 18:21

  • Correct, the 1099R is coded J for $500. I have to filed that as “income” on H&R block of $500 for 1099-R. 
  • in H&R, they is an option to put past years Deduction, I will mess around with that and see.
  • Because I’m at the adjustments & deductions, I mention that I made my 2017 contribution to tIRA ($5500), and that I got $500 excess contribution when they asked about my 2017 Roth IRA contribution. This is from “Lastly, tell us the amount of any 2016 excess contributions, if any. You can find this amount on 2016 Form 5329, Line 24.”. It has some funky language on the next page that “Since you contributed more than $0 (the maximum allowed) to your Roth IRA, you’ll be charged a 6% penalty. However, you can avoid this penalty by withdrawing the contribution, plus earnings, by April 17, 2018. We’ll ask you about the amount you want to withdraw, if any, in the Taxes, Payments, and Penalties Interview.
  • I also put in $5500 contributions, and excess contributions of $500, and Distribution of $500 when they asked about my previous contribution/destribution for 2016 Roth. As well as put my Basis of Contributions at $5500, and basis of Conversions at $500 (i’m not sure about this part at all). 
  • The funny part is that when i did that, and when i get to my taxes in “Retirement Plan, IRA, and Other Plan penalties (Form 5329), “, it knows that I put too much money into my Roth Contribution, but I can only enter “Amounts Withdraw” as 0. The only mention of Form 8606 as mention is back in when I put in my T-IRA & Roth Deduction but as I mention I didn’t do any IRA conversation, I cannot access the Form 8606. 
  • Any idea? I think i mess up somewhere on some of them, but if its all good, I might need to talk to someone at H&R (but that’s going to be a pain with so closed to finishing up, i know).

Submitted by Alan - IRA critic on Mon, 2018-04-09 23:13

I thought you didn’t make a 2017 Roth contribution. You had a 500 excess contribution from 2016 that you did not remove by 10/15/2017. That produced a 6% excise tax on Form 5329 for 2016. So you carried over a 500 excess contribution from 2016 and took a distribution of 500 in 2017. If this is correct, do not report making a Roth contribution for 2017.

Submitted by Delete User on Mon, 2018-04-09 23:34

  • Got it. I didn’t make 2017 Roth Contribution, it was 2016 Roth contribution which I took out in November 2017 which I amended and should’ve pay the 6% tax.
  • just very diffiocult from the wording on wht it meant. Thans for answering.
  • I still need to report 1099-R of $500 as income, right? And I need to figure out a way to report a 5329 (somewhere) that I don’t own anymore taxes because while I have 2016 excess contribution,it’s already pay off with the 2017’s $500 distribution from my Roth IRA (can’t that be seen in 1099-R?) 
  • And in my 2017’s 8606 (figure out how to get to that), I need to mention my non-qualified distribution in 2016 is $500, and that my basis is $5500 (line 22) so my line 23 is 0. My new roth basis from 2017 onward is $5000.

Submitted by Alan - IRA critic on Tue, 2018-04-10 00:35

Yes, you need to report the 1099R showing the 500 distribution on Form 8606. Lines 19 and 21 would show 500, line 22 would be 5500, and line 23 0. That’s it.  Yes, the IRS should know you removed the excess amount from the 1099R, but they require you to file the 5329 to make it official. 

Submitted by Delete User on Fri, 2018-04-13 04:32

  • Thank you for all your help! 
  • I eventually did some work & print out the actual form provided by H&R (as if I was doing paper filing), and after some twinks, I am able to get Form 5329 & Form 8606 with the correct thing! So everything works out well. This pretty much complete my 1 paperwork. 😀 
  • Well, actually I did have 1 question that I need to ask IRS about too. I hope you don’t mind me asking but When I did my amended tax return for 2016, (when I pay $30 in excess contribution and filed the 2016’s 5329 for excess contribution of Roth & did the amended return for 1040x for the Deduction of my $500 tIRA), I got some strange payment back from IRS.
  • From my form 5329, I pay $30 to IRS (via their site) for excess tax, and than I should have gotten back $45 from IRS for my $500 deduction. But instead, I got $75 back from IRS on the paperwork (for overpayment for 2016), and + 2.33 for the interest they own me MINUS $8.11 (amount applied to tax (form 5329) owed for 2016)  which mean I got $69.22 in check. So, rather than $30 excess tax, it’s $8.11? Very strange. Do you have any idea?
  • Actually, the 2nd part is even confusing since I filed the Amended 1040x/Form 5329 for 2016 twice by accident, and got a check for $1.87 & $69.22 but the first check (69.22) comes with paperwork explaning why but the $1.87 has nothing. I will just not deposit that. 

Submitted by Alan - IRA critic on Fri, 2018-04-13 16:58

If you did not claim a deduction for the 500 TIRA contribution on your 2016 return, then if you were in the 15% bracket, you would get back 75 plus interest, less interest on the late payment of the 6% excise tax. It is not clear what the 8.11 is for but since Form 5329 is considered to be a separate return from the 1040, the IRS may have levied a late filing penalty for the 5329 in addition to the interest. You should be able to deposit the 1.87.

Submitted by Delete User on Sat, 2018-04-14 02:16

  • I did claim a deduction of $500 for 2016 for my tIRA (via 1040x amended) , and suppose to get $45 back.
  • I also pay $30 for the late penaty for excess contribution to Roth for 2016 ($500 tIRA deduction from 1st bullet, but $500 excess roth which mean 6% of that is $30).
  • Not quite sure what 8.11 is, but I was curious why it seemss like they didnt penalty me for the excess contribution nor taken my $30. 
  • Oh well, i tried my best, so if they ask questions later, I would try to explain what has happen. 
  • Thanks for helping!

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