Author Topic: Contributed to IRA and then realized I went over income?  (Read 956 times)

headwinds

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Contributed to IRA and then realized I went over income?
« on: January 22, 2017, 08:45:28 PM »
So I had made the max contribution to an IRA in December of $5500. I realized a week or so ago that I am over income for eligibility. I withdrew my contribution plus all the profits it had made as best as I could figure.

What to do now? I am thinking just claim a contribution of $0 on my tax return for the IRA portion.

Is this correct?

Thanks!

RobertBirnie

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Re: Contributed to IRA and then realized I went over income?
« Reply #1 on: January 22, 2017, 10:25:34 PM »
Just claim $0. Deadline to withdraw over contribution is April 15th.

Quote
What you can do
There are several ways to correct the mistake, but it's best that you don't wait too long. Here's some help:
If you discover the error before you file your tax return
You can withdraw the excess contributions plus their earnings by your tax-filing deadline—usually April 15.
If you discover it after you've filed your tax return
You can either:
Remove the excess within 6 months and file an amended return by October 15.
Reduce next year's contributions by the amount of the excess. For example, if your limit is $5,500 and you exceed it by $1,500 in the current year, you can offset the excess by limiting your contributions to $4,000 the following year.
Be aware that when you "carry forward" an excess to a future year, you'll have to pay a 6% penalty until the excess is absorbed or corrected.

https://investor.vanguard.com/ira/excess-contribution