Distributions from your IRAs aren't to be taken lightly, but if you've made a mistake by taking money out, the IRS gives you a break and lets you redeposit it back into the IRA within 60 days. Even if you put it back in the same IRA, the IRS makes you report it as a "rollover" on either Form 1040 or Form 1040A. When you redeposit the money back into the account, it's treated as a distribution and a rollover, so you will still receive a Form 1099-R.
Report the amount of the distribution on line 15a of Form 1040 or line 11a of Form 1040A as a nontaxable distribution. You report the entire amount of the distribution as a nontaxable distribution even if you didn't roll over the entire amount, because this is how the IRS requires you to report it on your taxes. As long as you redeposit the entire amount, none of it will be taxable. For example, if you took out $10,000 and put it back in, you'd report $10,000 on line 15a if you use Form 1040 or line 11a if you use Form 1040A.
Report the amount of the IRA distribution that was not redeposited within 60 days on line 15b of Form 1040 or line 11b of Form 1040A as a taxable distribution. For example, if you completed the rollover by depositing the entire $10,000 back in the IRA, you'd report "0" on line 15b of Form 1040 or line 11b of Form 1040A. As long as you roll over the entire amount, none of it is taxable. However, if you don't redeposit a portion of it, that portion will be taxable.
Write "rollover" next to line 15b or line 11b to indicate to the IRS that you rolled over the money. Putting the money back in the same IRA is reported the same way on your taxes as if you had put the money in a different IRA.
Report the amount of withholding from your rollover distribution on line 62 of Form 1040 or line 36 of Form 1040A. The amount withheld appears in box 4 of Form 1099-R. This amount offsets your tax liability for the year and, if you don't owe any taxes, results in a tax refund.
- You've only got 60 days to get the money back in the IRA. If you take more than 60 days, you can't undo the distribution.
Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."