why does TT tell you to put into IRA, when you mark unemployed in the boxes

Forum|Forum|1 year ago
April 20, 2024
1 reply
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So why if you put unemployed on your Turbo tax, both spouse and yourself, it still triggers you at the end to put 7500 into an IRA to save on your taxes...We did that for 4 years now I am losing thousands paying back taxes on that money and on the taxes it saved us when we itemized and the money it is costing us for a CPA to get us out of this mess...and now that money will put us over 200,000 because taking that money out of the account and putting it into a brokerage account, gives us added income from that stupid IRA, that Turbo tax directed us to do...turbo tax algorithm should have caught we both were unemployed.....no IRA offer should EVER pop up..we just didnt know...Is this legal??

Best answer by fanfare

No it didnt tell me excessive contribution for the 6 years i did it, my husband never took unemployment, we were living on my SSDI and my FERS retirement check. thats why i think it sucks, i was just following turbo tax....just frustrating,

"all the money made on the IRA,"

Any gains you made on excess IRA contributions still in there past the tax due date remain in the IRA.

If you took gains out, that is a (another) mistake.

Unfortunately the 6% penalty adds up when two persons max out for four years with excess contributions.

@munoz124

fanfare

Employee

"back taxes on that money and on the taxes it saved us when we itemized"

If an excess remained past the due date of your tax return, you would not have any itemized deduction savings to back out. IRA contribution does not impact your itemizing.

You only pay a 6% penalty per year on the accumulating excess. And, any earnings in your IRA stays there.

You can't get a tax saving from IRA contribution unless you had income.

You should discuss this with your CPA.

@munoz124

fanfare

Employee

"putting it into a brokerage account, gives us added income from that stupid IRA"

removal of excess contribution is not income.

Maybe you need a new CPA.

munoz124Author

We never needed a CPA before, we were only living on my SS and retirement check, again, algorithm should have caught that, i took the money out of savings to put into the IRA's to save on taxes.