Has anyone actually had the IRS challenge their Form 5329 exception for excess Roth contributions? I'm worried about audit risk if I claim the exception.

I went through this exact same situation a couple years ago - foreign earned income exclusion and accidentally contributed to a Roth IRA. You're absolutely on the right track with Form 5329 and exception code 12. One thing that helped me was keeping all the documentation from my investment company showing the "removal of excess contributions" process. The IRS wants to see that you properly corrected the ineligible contribution rather than just taking an early distribution. Your PJ distribution code on the 1099-R actually supports your case - the P shows it's a return of principal (your original contribution) and the J indicates it's from a Roth IRA. Don't let the tax software scare you into paying a penalty you don't owe. The 10% early distribution penalty specifically doesn't apply to corrective distributions of excess contributions when done properly, which it sounds like you did. File the Form 5329 with confidence - it's the correct and expected way to handle this situation.

I've been through the Form 6781 maze myself and wanted to add a few practical tips that might help you with your SPX/SPY options situation. First, make sure you're keeping detailed records of when you opened and closed each leg of your straddles. The IRS requires you to identify which positions form each straddle, and you'll need the exact dates and amounts for Form 6781. I use a simple spreadsheet to track this. For your SPX options specifically, remember that they're marked-to-market at year-end even if you haven't closed them, so you'll need to report any unrealized gains/losses on positions you're still holding. This is different from your SPY options which are only reported when you actually close them. One thing that caught me off guard my first year: if you have any straddle positions still open at year-end, you need to calculate the "unrecognized gain" for Part III of Form 6781. This is basically the paper profit on the winning leg of any straddle where you took a loss on the other leg. Also, since you mentioned using TurboTax, make sure you're using the Premier version - the basic version doesn't handle Form 6781 properly. Even then, you might need to manually override some of the calculations if you have complex mixed straddle situations.

Great discussion everyone! As someone who's been dealing with options straddles for a few years, I wanted to add a couple of additional considerations that might help @Daniel Price and others in similar situations. One thing I learned the hard way is to be very careful about the "substantially identical" rules when you have straddles. If you close one leg of a straddle at a loss and then open a similar position within 30 days, you could trigger both wash sale rules AND straddle loss deferral rules simultaneously. This creates a complex interaction that can defer your losses even longer than you might expect. Also, since you mentioned you started in March, make sure you're applying the straddle rules consistently throughout the year. The IRS expects you to identify straddle positions when you establish them, not retroactively at tax time. While you can sometimes make elections after the fact, it's much cleaner if you have documentation showing when positions were intended to be straddles. For your $14,200 in profits, depending on how much of that came from straddle positions versus outright directional trades, you might find that some of those gains need to be adjusted based on previously deferred losses from the offsetting legs of your straddles. This is where keeping detailed records of which trades were part of straddles becomes crucial. The tools mentioned like taxr.ai sound helpful for automating this process, but make sure whatever method you use properly handles the timeline of when straddles were established versus closed.

Check the actual date listed next to your 846 code on the transcript. That date is when the IRS schedules the deposit to be sent to your bank. Then your bank might take 1-3 more days to actually post it to your account. My 0604 path return had the 846 code but the date was for NEXT week, so I was checking my account for nothing.

has anyone noticed that the 0604 path seems to be moving slower this year? i filed in January, got my 846 code last week, and my refund just hit my account today. last year i was a 0605 path and got my money 2 days after the transcript updated. is the irs just prioritizing certain paths first this year?

Here's what you actually need to know about transcripts and processing: - As Of dates are administrative markers for the IRS internal systems - They DO NOT indicate refund timing - What matters: 150 (return filed), 570 (hold), 571 (hold released), 846 (refund issued) - Early filers (Jan/Feb) typically see 2-4 week processing - Path Act claims (EIC/ACTC) won't release before Feb 15 Instead of stressing over every little change, I highly recommend using taxr.ai - it's an AI tool that reads your transcript and gives you an exact analysis of your situation, expected timeline, and any potential issues. Way more accurate than guessing. Hope this helps! 🙌

Same here! Filed 1/28 and my as of date has been 2/10/25 forever. I was panicking too but after reading everyone's comments I feel better knowing it's normal. Seems like us early filers just gotta wait it out. The waiting game is brutal though 😅

This is such a common mistake with teenage filers! I went through the exact same thing with my daughter two years ago. The good news is that it's totally fixable, though it requires some patience. From my experience, you have three realistic options: 1. **Wait for your son to file Form 1040X** - This is the "correct" way but takes 8-16 weeks to process. Your son would amend his return to indicate he can be claimed as a dependent. 2. **File your return without claiming him this year** - You'll get a smaller refund now, but you can file your own 1040X later to claim him once his amendment processes (adding even more waiting time). 3. **File for an extension** - Gives you until October to file, but delays your refund. Honestly, if you need the refund money soon, option 2 might be your best bet despite the hassle. You'll at least get some money now rather than waiting months for the full amount. One tip: Make sure your son understands the dependency rules for next year! The software questions can be confusing, but if he's still in high school and you're supporting him, you should be claiming him. Good luck!

This is such a stressful situation, but you're definitely not alone! I went through something similar with my 18-year-old last year. One thing that really helped me was getting organized with all the paperwork first. Make sure you have copies of both your son's W-2 and his filed return so you can see exactly what boxes he checked. This will help when you're explaining the situation to the IRS or filling out the amendment forms. Also, if you do decide to go the amendment route, consider having your son file the 1040X sooner rather than later. The processing time starts from when they receive it, not from when you figure out what to do. Every day you wait is another day added to that 6-16 week timeline. One more thing - make sure to keep detailed records of everything (dates you called the IRS, reference numbers, what agents told you, etc.). If there are any complications down the road, having that paper trail can be really helpful. Hang in there! It feels overwhelming now, but this will get sorted out. The IRS deals with these dependency conflicts constantly, especially during tax season when teenagers are filing for the first time.