Received 1099-R and check in 2014 for excess contribution. Co wants the money back & says I can take repmt as item deduct not subj to 2% or credit in 2015. Anyone know?
My client received the check in Dec 2014, the 1099-R in January 2015 and we knew it was wrong. Contacted the company who said my client HAD to cash the check and when they fixed it (apparently it was all employees) they would let client know. Sent out a letter in May 2015 that said to repay it along with "instructions". Those instructions said that client cannot amend his 2014 tax return. It said that because the repayment was in excess of $3,000 that he had a choice of treating the repayment as an itemized deduction not subject to 2% or claiming a credit against your 2015 taxes for the taxes you paid on the excess distribution in 2014. Well, I have no clue how to take a credit for the $1,774 in additional income tax he paid on that distribution in 2014. He would get nothing as an itemized deduction because he can't itemize even with the large repayment.