Excess Contribution

[Lion]

I have a client who made an excess retirement contribution for 2007 that was returned to him during 2008 with a letter from his employer giving details. He'll receive a 2008 1099-R in 2009. But, I'm just filing his 2007 return now. If I include the excess NOW, I won't have to amend later, right? So, do I put it on line 21 since he's already paid FICA/Medicare and just needs to pick it up for income taxes? Or...? And, then ignore next year's 1099-R? Haven't had one of these in years and years and can't find what I did at the time.

[geekgirldany]

Here is a post I found about the Code P.

http://www.thetaxbook.com/forums/showthread.php?t=88&highlight=excess+contribution+code

[veritas]

I believe

I have a client who made an excess retirement contribution for 2007 that was returned to him during 2008 with a letter from his employer giving details. He'll receive a 2008 1099-R in 2009. But, I'm just filing his 2007 return now. If I include the excess NOW, I won't have to amend later, right? So, do I put it on line 21 since he's already paid FICA/Medicare and just needs to pick it up for income taxes? Or...? And, then ignore next year's 1099-R? Haven't had one of these in years and years and can't find what I did at the time.

it goes on line 1 as wages.

[Lion]

Wages

I know it should go on the line for wages. But, it's a pain getting it to go there when it wasn't on a W-2. And, then the W-2 won't match the wages line. And, the amount won't stand out to match up to the 1099-R that will show up next year -- I want to be able to remember myself what I did and to show the client and to document to the IRS that that income was already included in his 2007 return. So, since the FICA/Medicare have already been withheld, should I put it on line 21 while I'm still completing his 2007 return now instead of amending next year?

[veritas]

Your software

should automatically put the excess amount on line 1 when you input code P. You can put it on line 21 but you will get a letter.

[solomon]

I know it should go on the line for wages. But, it's a pain getting it to go there when it wasn't on a W-2. And, then the W-2 won't match the wages line. And, the amount won't stand out to match up to the 1099-R that will show up next year -- I want to be able to remember myself what I did and to show the client and to document to the IRS that that income was already included in his 2007 return. So, since the FICA/Medicare have already been withheld, should I put it on line 21 while I'm still completing his 2007 return now instead of amending next year?

If you call the IRS they will tell you (at least did for me) to simply add the excess contribution to box 1 of the W-2. Don't worry about it not matching. They will check that when they get a 1099-R from you with code P in 2009 and know the excess was repaid on the 2007 tax return.

[Lion]

Ok

Well, just changing box 1 of the W-2 is certainly the simplest way. (I worked for Block for years and was taught to never change a tax document.) I can't make up a 1099-R this year when one will be issued next year, so the code P won't work on the 2007 return. Thanks for all your help.

[travis bickle]

Solomon, I often look forward to your replies,

If you call the IRS they will tell you (at least did for me) to simply add the excess contribution to box 1 of the W-2. Don't worry about it not matching. They will check that when they get a 1099-R from you with code P in 2009 and know the excess was repaid on the 2007 tax return.

[Emphasis added]

because of your succinctness and accuracy. But is the above the same IRS I know?

[solomon]

Well, just changing box 1 of the W-2 is certainly the simplest way. (I worked for Block for years and was taught to never change a tax document.) I can't make up a 1099-R this year when one will be issued next year, so the code P won't work on the 2007 return. Thanks for all your help.

When you (or client) receives a 1099-R in 2009 (for 2008) it will show code P. At that time the IRS will match Line 7 of the 1040 with the W-2 (2007 filed and excess paid in 2008) and note that the excess in fact was repaid.

Code P has nothing to do with your 2007 return you are now doing - that is, it does not appear in tax year 2007.

[veritas]

When you (or client) receives a 1099-R in 2009 (for 2008) it will show code P. At that time the IRS will match Line 7 of the 1040 with the W-2 (2007 filed and excess paid in 2008) and note that the excess in fact was repaid.

Code P has nothing to do with your 2007 return you are now doing - that is, it does not appear in tax year 2007.

Code P is very much relevant if you enter the excess amount in your tax program for 2007, as if you had the 2008 1099R now. The amount will carry to the appropriate line on the 1040.

[solomon]

[Emphasis added]

because of your succinctness and accuracy. But is the above the same IRS I know?

I know what you mean. Luck was with me that day as I was insistent on speaking with the head of the pension - specifically the 401K division (don't know how organized but those were my words). Probably would never happen again.

[solomon]

Code P is very much relevant if you enter the excess amount in your tax program for 2007, as if you had the 2008 1099R now. The amount will carry to the appropriate line on the 1040.

But he does not have a 1099-R and should not pretend he does.

[veritas]

Ok

I give up.

[solomon]

I give up.

Glad you did because had you pursued that line of thought I was going to give up.

[Lion]

I Got It!

I got it. Called ProSystem fx. (They have longer hours now, but I was at a client's site and didn't want to sound as dumb as I really am calling support, so I just e-mailed and messaged.) Nice guy told me to use a 1099-R with a Code 8 to get the amount into wages AND print out a statement listing his sources of wages which includes the line for "excess contribution." That's what I was wanting, so I could remember next year what I did and could show client and can explain to IRS with a paper trail. Thank you everyone for taking an interest in my situation.