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Posted by Condor on April 16, 2008, 8:03 am
Please log in for more thread options >I received a 1099R for the tax year 2007, with distribution code "P"
> -- which says "Excess contributions plus earnings / excess deferral
> taxable in 2006". Both line 1 and 2a are listed with equal $ amount.
> The actual amount was sent by Fidelity in year 2007, not 2006.
>
> I must report this 1099R, but TaxCut and TaxACT handle this
> differently as TaxCut says to amend 2006 Return and TaxACT adds it to
> 2007 income.
>
> Since excess contributions are returned in a year (2007) which is
> different than the year the excess contribution was made (2006).
> Doesn't this get reflected on the W-2 the company sends and already
> taxed?
>
> Do I need to file 1040X for 2006 to handle this and would that mean
> additional Tax payments for 2006 (recalculation of 2006 taxes with
> this amendment). If this is the case how can I calculate what
> additional payments to make and is there any penalty on top of that?
A distribution reported on a 2007 1099-R with distribution code P means the
plan returned the 2006 excess deferral to you in 2007 but on or before March
15, 2007. An excess deferral that is returned to a plan participant by
March 15 of the following year is taxable on the previous year's return,
i.e., in your case the distribution is taxable on your 2006 return. Excess
deferrals normally are reported as wages on Form 1040, line 7. Since you
have filed already for 2006 and need to amend your return, the unreported
income is shown on Form 1040X, line 1, column B. You need to explain the
source and type of the additional income in Part II of Form 1040X.
http://www.irs.gov/pub/irs-pdf/f1040x.pdf
IRS does not normally assess penalties for additional income reported on
Form 1040X. By law, you will owe interest computed from April 15, 2007.
IRS compounds interest daily at the applicable quarterly rate. The
quarterly rates are listed on the web page linked below. See the first
table under "Interest Rate on Noncorporate Overpayments and Underpayments."
http://www.smbiz.com/sbrl004.html
Condor
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