Form 5329

[Forensicacctnt]

A 1009-R was issued by an investment firm that shows an excess contribution of $1,006 on a Roth IRA for 2016. The person is a dependent on his parent's 2016 tax return. Can the form 5329 be filed by itself or because he is a dependent does it have to go with his parent's return? The person had unearned income (ordinary dividends $382, cap gain distribution $354 and a realized long-term capital loss of $229 on stock transactions.) No earned income.
Thank you.

[Rapid Robert]

Can the form 5329 be filed by itself or because he is a dependent does it have to go with his parent's return?

His tax return, if any, is separate from his parents. Even an infant is a separate taxpayer. So, his Form 5329, if required, should be filed under his name and TIN -- just like his Roth IRA is set up.

Yes, there are rare cases where a child's interest/dividends can be reported on the parent's return, but that is the exception to separate filing.

[Forensicacctnt]

His tax return, if any, is separate from his parents. Even an infant is a separate taxpayer. So, his Form 5329, if required, should be filed under his name and TIN -- just like his Roth IRA is set up.

Yes, there are rare cases where a child's interest/dividends can be reported on the parent's return, but that is the exception to separate filing.

Thank you for this information.

[Forensicacctnt]

I'm rather curious as to how ANY money would have been (thought to have been) allowable for a Roth IRA deposit.

What distribution code was on the Form 1099-R ?

Agree with Rapid Robert that this is not a matter that can be reconciled via parents' tax return.

Simplest approach would be to efile a separate Form 1040 + Form 5329 for the dependent.

FE

Distribution code on the 1099-R was J. I will file a separate Form 1040 with Form 5329. I don't know at present how this excess contribution occurred. I have more information gathering to do.
Thanks for your help.

[dtlee]

Not sure if this applies or not, but if there is no impact on the tax return itself, Form 5329 can be submitted separately without amending anything. It is a standalone form that can be filed with or without the tax return. That might be true if this is just an excess contribution.

However, the code described is for an early distribution, not an excess contribution, so I am likely misreading a few things here. Either way, the child's tax situation is separate from the parents as discussed earlier.

I think what will be needed is an amendment to the child's return to complete Form 8606 and report how much of this distribution was a return of the taxpayer's post-tax contributions so that the taxable portion and the amount of penalty on Form 5329 can be computed.

[Toobusy]

Roth Income with No Earn Income

Form 1040 or form 5329 do not have to be filed for dependents with unearned income. He probably does not have to file at all if the investment income is 0- $1,050; if over then the Kiddie Tax Form 8614 should be used.. Take a look at IRS Pub 929, and 2016 Taxbook, page 12-9 - 12-11.

Research is power!!!

[Rapid Robert]

Form 1040 or form 5329 do not have to be filed for dependents with unearned income.
Research is power!!!

Revise that -- "ACCURATE research is power!!"

I looked at Pub 929 as you advised, and it specifically says a child must file a Form 5329 if it applies, regardless of other filing requirements. Your statement quoted above is false. More to the point, instructions for Form 5329 do not reference any exceptions for dependents.

[Burke]

I'm rather curious as to how ANY money would have been (thought to have been) allowable for a Roth IRA deposit.
FE

That was my first thought upon reading OP. No earned income = no allowable IRA contribution (ROTH or otherwise). Entire amt is excess subject to 5329 completion.