- 1). Deposit within 60 days an amount up to the amount you requested for your withdrawal, including any money withheld for income taxes. For example, if you requested $10,000 but your financial institution withheld $2,000 for taxes, you can replace up to $10,000 even though you only received $8,000.
- 2). Report the amount of the withdrawal on your income taxes as a nontaxable distribution using form 1040 or 1040A. This amount will not be included in your taxable income.
- 3). Report the amount of your withdrawal that you did not redeposit within 60 days, if any, as a taxable IRA distribution. For example, if you withdrew $10,000 but replaced $7,000, you would have to report a $3,000 distribution.
- 4). Record the amount of money, if any, kept by your financial institution as income taxes withheld. This amount will reduce your taxes due. If you have excess withheld, you will receive a refund.
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