OVERPAID ON TAXES

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Joshua88
Joshua88 Member Posts: 4 Newcomer

WHEN I MADE CONTRIBUTION TO IRA, IT SOMEHOW COUNTED AS AN OVER-PAYMENT - WHICH IT DEFINITELY WAS NOT - AND I PAID TAXES ON IT.

HOW DO I CLAIM THAT OVER-PAYMENT THIS YEAR?
CAN I GET MY MONEY BACK?
THINK IT HAPPENED MORE THAN ONCE.

(CHECKING MY RETURNS.)

THANK YOU.

Best Answer

  • kiarab
    kiarab FreeTaxUSA Agent Posts: 58
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    Hello,

    So the IRA contribution limit is 6,500 (7,500 if you are 50 or older) OR, IF LESS, your taxable compensation for the year. ( https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits#:~:text=Note%3A%20For%20other%20retirement%20plans,taxable%20compensation%20for%20the%20year )

    Taxable compensation is essentially your earned income. Things like wages and business income count. Things like interest, dividends, capital gains, retirement income does not.

    If you didn't have much taxable compensation, then the amount you can contribute will be limited even if you were under the 6,500 overall limit.

    You have until the filing deadline (or extension deadline if you file an extension) to withdraw your excess contributions and avoid a penalty. You can contact the people who handle your IRA to do the withdrawal and you should get your excess contributions back. Make sure to withdraw any earnings your excess contributions may have as well. If you do not thing you can do this by tomorrow (the filing deadline), you should file an extension to give yourself more time to do so. Make sure, if you owe taxes, to make a payment with your extension to avoid the late payment penalty.

    I am a little confused by you saying that you paid taxes on your IRA contributions. You should not be paying any taxes on your IRA contributions, if you take a IRS distribution, then yes, there may be taxes on that. Or if you converted a traditional IRA to a Roth, there may be some taxes owed there as well.

    It may be helpful for you to contact customer support as they can see the specifics on your return.

Answers

  • Joshua88
    Joshua88 Member Posts: 4 Newcomer
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    I paid taxes on overpaying my contributions, but I did NOT contribute more money than allowable. According to your link, I can claim up to the limit. I did not contribute more than the limit for my age and the years filed.

    Wasn't recent, but past years.

    Sched 2, Line 8 Additional tax on IRAs or other tax-favored accounts. HERE is the amount.

    The two lines at the end say, "You have excess Roth IRA contributions."
    DID you you withdraw any by filing date due? NO.

    Thank you.

  • RyanZ
    RyanZ FreeTaxUSA Agent Posts: 70
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    IRA contributions are limited based on your income, so if your income is too high, the amount contributed is considered to be an Excess Contribution. If the excess contribution is not removed by the due date of the tax return (including extension if you extended) then the excess contribution will be subject to a penalty each year until it is removed.