Like the title says, from the filing process and tax questions to tax policy and reform, you can search and share All Things Tax here. This is the place to find answers to all your general questions that don't fall under the other categories. And just a reminder: questions about software or online filing should be posted in DIY Products.
04-18-2017 12:19 PM
I opened a Roth IRA account by contributing 5,500 in 2016 (before the tax deadline) for the year 2015. This year, I added 5,500 again (in 2017, before the tax deadline) as a contribution for 2016. My income is well within the range for which 5,500 is the maximum contribution.
So, I entered 5,500 in the box for "total 2016 contributions" and 5,500 for contributions made only between jan 1 and april 18 2017, and 0 for excess contributions. When I enter this information, I get a message telling me that I contributed more than the $497 maximum and I will have to pay a penalty. Why is it saying the maximum is $497 when it should be $5500? Please help!!
04-21-2017 09:07 PM
Welcome to the H&R Block community.
Is your income made up mostly of unearned types of income such as social security & retirement distributions? If so then this is why you have an excess contribution.
The contribution limit for a Roth IRA (which is the same for a traditional IRA) is the lesser of either (1) your earned income, or (2) $5,500. So if you had $497 in wages and the rest of your income was unearned income you can only contribute $497.
If you have any other questions I'll be glad to help.
Senior Tax Advisor (Tampa, FL)