Characterization of Excess Withholding
How does one characterize (for tax purposes) the excess withholding in the following scenario
12/01/2013: initiate an IRA $10,000 distribution with federal withholding designated as 100%.
01/10/2014: deposit $10,000 cash in IRA, in accordance with 60 day rule.
2013 federal income tax filing: W2 Withholding + 1099 IRA withholding result in $5,000 refund.
How does one characterize the $5,000 refund??
Permalink Submitted by Alan - IRA critic on Mon, 2014-02-24 22:27
Not sure what you mean by “characterize”. You can do this as a way of avoiding an underpayment penalty for 2013. You would just report an IRA rollover on line 15a and 15b of Form 1040 and claim credit for the 1099R withholding on p 2 of Form 1040. The refund is like any other tax refund due to overwithholding.