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Subject:  Re: F/UP TMFPMarti, IRA Excess Contrib Date:  3/31/2008  7:16 AM
Author:  TMFPMarti Number:  99902 of 127513

#1: Box 1 $5443, Box 2 $443, Box 7 1, and check the IRA box.

#2: Box 1 $4885, Box 2 $0, Box 7 1, and check the IRA box.

This should give you $443 on line 15b and $44 on line 60 of the 1040.

I finally got all my data to file, and.
I did all of the above with the following changes. Box 7, I selected "8" vs "1" and I did check the IRA box.

This resulted in the $10,329 in 15a, $443 in 15b, but nothing on line 60.

Well, first the good news. Your return is showing the correct numbers on lines 15a and 15b, assuming there's a typo by one of us in your numbers regarding 15a. (According to what's shown above, 15a should be $10,328.) I've gone back and re-read the thread, and it's up in the air as to whether there should be a penalty. It slipped right past me earlier that at least one of you was over 59 1/2 at the time of the distributions.

Regardless of what the software is doing, if the person with the positive earnings was under 59 1/2 at the time of the distribution, you owe the 10% penalty on the earnings.

Software complicates, rather than simplifies this process. I input two 1099-R's with code 1 and two with code 8, both spouses under 59 1/2. Code 1 correctly produces the penalty; code 8 doesn't. I have no idea why.

What we need to know is whether in your specific case the penalty applies.

Also, the fairmark folks suggested to everyone with a similar situation to add an explanatory note, so the IRS will be happy when this is reported for 2008. I added the explanation at line 15b where there is box to select an explanation, but I don't see where this shows up in the forms to the IRS.

Actually, it has nothing to do with your 2008 return. The 2007 instructions tell you to attach an explanation of the numbers on line 15. When you print out a final version of your return we'll see whether the software has produced the statement because you checked that box, which isn't on the actual 1040.

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