Excess ira contribution penalty

[KWF]

While preparing a taxpayers 2013 return, it is determined that a 2012 excess roth ira contribution had been made during 2012.

Can the 2012 penalty for that excess contribution be computed and paid with the 2013 tax return, or does the 2012 tax return need to be amended to show the 2012 penalty?

If the taxpayer withdraws the 2012 excess contribution prior to april 15 2014, will there be any penalty for 2013?

[TXEA]

The 2012 return should reflect the penalty for 2012 and the 6% penalty will be due again in 2013 and all succeeding years until the amount is withdrawn or deemed to be made applied for the current year.

So, for example, if the taxpayer either earned too much or contributed too much for a prior year, then you can deem the excess contribution to apply to the subsequent by showing such on the Form 5329, Part IV, Line 19. You can only do this if they qualify in the year to make a contribution.

So, for example, if the taxpayer has an excess contribution for 2012 of $500.00, and they qualify to make a Roth in 2013, then you can deem that $500.00 excess to be a 2013 contribution on the Form 5329 and avoid the 6% penalty in 2013. This is assuming they have not already contributed the maximum for 2013.

See the instruction for 5329, Part IV, Line 19.