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Posted by Bill on February 7, 2007, 7:48 pm
Please log in for more thread options ybotkaSPM@cinci.rr.com (tobe) posted:
> I am retired and had no wages, salary, or tips
> for 2006. Through an error, a dividend check
> was deposited into an existing Roth IRA.
> When this was discovered, I withdrew the
> check as an excess contribution. There was
> about $7 of income earned on the excess
> contribution while it was in the Roth IRA.
Had you withdrawn that $7 at the same time during calendar
year 2006, there would be no issue.
> IRS Pub 525 tells me to put that $7 on line 7
> of Form 1040 (wages, salary, tips). However, I
> am retired and had no earned income for
> 2006, so this makes no sense to me. It is not
> as if it is income generated by an 'earned
> income' excess contribution.
> If I list 'income' on line 7 of Form 1040, I will
> have to file a local tax return (taxed on earned
> income only), and I am trying to avoid
> ANOTHER form to fill out.
> Should I just include it as interest income,and
> include an explanatory note with my return?
The $7 is an amount which is generally considered "de
minimis" (Hope that Latin is correct) -- or too
insignificant to worry about. But you could reasonably
comply with the spirit of the requirement by noting the $7
under "other income" on line 21, noting it was "interest
earned by a mistaken deposit to your Roth IRA, which was
corrected."
Or you could just include it as "interest" and describe it
similarly (as briefly as possible) when you enter it on
Schedule B.
I would avoid a separate explanatory note, when just a few
words can define it.
Bill
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