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The codes 8,1 seem to make it sound like it's a taxable situation. Since I never took a IRA deduction on that excess contribution is it correct that it would be a taxable situation?

Again, I would suggest you sit down with your tax preparer and ask him, as this situation is too complex to try to resolve via message boards or e-mail. There is still information (like dates and which year you were contributing for) missing. And the $1000 in the timeline doesn't match up with the $1800 that you said was on line 1.

That said, if you contributed a total of $6500 in new funds ($1000 originally into the Roth and $5500 more originally into the Traditional), and you were only eligible to contribute $5500, then, yes, you made an excess contribution. Excess contributions can incur taxes and/or penalties, depending on if/how/when they are removed. Again - a situation to discuss with the tax preparer face to face.

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