Taxes -- Red flags?

[kork13]

I've all but finished my taxes with H&R Block online, but in the final review, the software highlighted two issues that I'm trying to understand, and figure out how to fix (if I even need to at all?)....

Here's what H&R Block's software is telling me:

A) Based on what you've told us, you contributed more than the $18000 annual limit to an employee retirement plan last year. Review what you've entered in W-2 Box 12 to make sure everything's correct. If the amounts shown are correct, you need to work with your employer to get back your excess contributions.
B) Box 3 on Form 1099-DIV is a nontaxable return of cost. Please reduce your cost or other basis by this amount. If your basis is zero, this should be treated as capital gains.

Both of those assessments are, by the numbers, correct.

A) My 2015 TSP contributions included $1039.22 in pre-tax (401k-type) contributions, $17299.37 in Roth contributions, and $546.96 in what is listed as a 403b contribution (Box 12, Code E). I know, I know -- I'm over-contributed in my pre-tax & Roth contributions as-is, before even considering the Code E stuff. The payroll brains caught that, fixed it, and issued me a corrected W-2 adjusting my Roth to $16960.78, which adds up perfectly to $18k between my pre-tax & Roth contributions. Now this $546.96... it happened by accident, because I deployed to a combat zone last year in March. At the beginning of the year, I had a pre-tax contribution of about $546/mo, and when I deployed, I changed that to be 100% Roth--hooray CZTE! However, that change didn't take effect in the first month (March), and I ended up with the $546.96 (by my understanding) as a pre-tax, tax-exempt contribution....which seems wasteful of tax-advantaged space, but that error is beside the point. However, I *THINK* that I'm still legal here, because I'm pretty sure the $546.96 was actually counted as a "Annual Addition Limit" contribution for me. So bottom line: Is there something that I need to do to fix this, such as getting yet another correction to my W-2? Or can I submit my taxes with this overage with no problems at all?

B) At issue for this one is $1.02 listed on my 1099DIV from my small, taxable, Vanguard Brokerage account. The problem is I have no idea what this "flag" wants me to change. Box 1a (total ordinary dividends) shows $30.48; Box 1b (qualified dividends) shows $27.51; Box 3 (non-dividend distributions) has $1.02; Box 6 (foreign tax paid) has $0.13. The "flag" talks about my basis, but I haven't reported it anywhere with my 1099DIV, so there's nowhere that I can adjust the basis. I'm just totally lost on this one, and have no idea what I'm supposed to do to fix this, if there even IS anything that I can/should do.

Can anybody clarify these two issues for me? Thanks all!

[creditcardfree]

I think you are okay on the first one. The second one seems so minor.

It appears you can contribute up to $53000 to the TSP if you are receiving tax free income in a combat zone. I've found HR Block to have issues with combat zone tax code, thus the red flags.

Source

[creditcardfree]

Also I don't think that your W2 is wrong.

[kork13]

I think you are okay on the first one. The second one seems so minor.

It appears you can contribute up to $53000 to the TSP if you are receiving tax free income in a combat zone. I've found HR Block to have issues with combat zone tax code, thus the red flags.

Source

That's the same site that I found as well, and my thinking on it. I figure if they already caught/addressed the overage to take me exactly to the $18k max, I presume they would have taken into account this extra amount and adjusted appropriately if it was actually a problem.

On the second issue, totally agree that it's minor to the point of irrelevance. I'm thinking that may be something that is simply taken into account when I sell the investments, and something that Vanguard would probably be tracking...

So I'm leaning in both cases toward just ignoring then & pressing on.

[creditcardfree]

So I'm leaning in both cases toward just ignoring then & pressing on.

Yes, I think that would be the right thing...sometimes we know more than these software programs!

[MakeAStash]

For B, the software is providing a reminder for the future. What the software wants you to change is your records of the cost basis of that asset (how much you paid to acquire it). In this case if you paid, let's say, $100 for that asset but now have $1 worth of distribution to account for, your cost basis of that asset decreases to $99. In the future when you sell that asset and report the sale for tax purposes you will list on your tax forms that decreased number as cost basis.