- quote -

A distribution reported on a 2007 1099-R with distribution code P means the
plan returned the 2006 excess deferral to you in 2007 but on or before March
15, 2007. An excess deferral that is returned to a plan participant by
March 15 of the following year is taxable on the previous year's return,
i.e., in your case the distribution is taxable on your 2006 return. Excess
deferrals normally are reported as wages on Form 1040, line 7. Since you
have filed already for 2006 and need to amend your return, the unreported
income is shown on Form 1040X, line 1, column B. You need to explain the
source and type of the additional income in Part II of Form 1040X.

http://www.irs.gov/pub/irs-pdf/f1040x.pdf

IRS does not normally assess penalties for additional income reported on
Form 1040X. By law, you will owe interest computed from April 15, 2007.
IRS compounds interest daily at the applicable quarterly rate. The
quarterly rates are listed on the web page linked below. See the first
table under "Interest Rate on Noncorporate Overpayments and Underpayments."

http://www.smbiz.com/sbrl004.html


Condor

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rajchaudhry[at]gmail.com wrote:
- quote -

But, as stated, it is taxable in 2006.


- quote -

No, that is the problem. It was never included in your 2006 W-2 box 1
and now needs to be added back as wage income.

In this group I've read that if you know about the issue prior to filing
the return in question, you can include the amount "in advance" of the
1099-R and thus avoid the necessity to amend a year later -- makes sense
to me. You basically need to enter a substitute 1099-R code 8 for the
taxable year instead of a code P for the following year.

- quote -


Yes. The process of amending a return includes re-calculating the
original return with the new items. Software does it easily. Interest
and penalties can be calculated by the IRS

-Mark Bole

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

I received a 1099R for the tax year 2007, with distribution code "P"
-- which says "Excess contributions plus earnings / excess deferral
taxable in 2006". Both line 1 and 2a are listed with equal $ amount.
The actual amount was sent by Fidelity in year 2007, not 2006.

I must report this 1099R, but TaxCut and TaxACT handle this
differently as TaxCut says to amend 2006 Return and TaxACT adds it to
2007 income.

Since excess contributions are returned in a year (2007) which is
different than the year the excess contribution was made (2006).
Doesn't this get reflected on the W-2 the company sends and already
taxed?

Do I need to file 1040X for 2006 to handle this and would that mean
additional Tax payments for 2006 (recalculation of 2006 taxes with
this amendment). If this is the case how can I calculate what
additional payments to make and is there any penalty on top of that?

Any help will be greatly appreciated.

Thanks

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >