Excess IRA contribution

Forum|Forum|3 years ago
April 3, 2023
1 reply
17 views

How do I account for the following regarding excess IRA contributions made in 2021 TY? Do I amend 2021 for excess IRA contributions made last year, or do I show it on 2022 Form 5329? I told the clients the amount to put in each of their IRA's but they got them switched and put the amount for hers (which was limited) in his and vice versa.

Lacerte Tax

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Best answer by rbynaker

I think we may still be short on details but it sounds like you don't have an excess contribution, just a non-deductible contribution. Amend the 2021 return with the correct entries and see if the software throws some basis on an 8606.

A lot of folks confuse excess contributions with non-deductible contributions.

qbteachmt

Level 15

"I told the clients the amount to put in each of their IRA's but they got them switched and put the amount for hers (which was limited) in his and vice versa."

Are you certain there cannot be a spousal allocation that resolves this?

Otherwise, you would report the excess every year until it is removed, including gain/loss.

Which type of IRA account is this? Are they able to apply the overage to the following year, instead of removing it? Because now you have two year ends gone past.

Don't yell at us; we're volunteers

I

ironmomAuthor

Level 4

I will be more specific - for the 2021 tax year TP was allowed $7,000 (spousal contrib.) Spouse was allowed $1,990. They put $1,990 in his and $7,000 in hers. These are traditional IRA's. They may be able to apply a portion of it to the 2022.

rbynakerAnswer

Level 13

I think we may still be short on details but it sounds like you don't have an excess contribution, just a non-deductible contribution. Amend the 2021 return with the correct entries and see if the software throws some basis on an 8606.

A lot of folks confuse excess contributions with non-deductible contributions.

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