Hi Bob Jennings here. I'm going to talk about non-deductible IRAs today. You know, I'm not much of a fan of these things. There's only one reason to have a non-deductible IRA and you know what it is. Think about it for a minute. It's because you can't have a Roth IRA. A Roth IRA is always better. Let's make sure that we understand it's a non-deductible IRA. You're not allowed to deduct the money you put in, unlike a Roth IRA. With a non-deductible IRA, you don't pay tax on whatever you earn. However, with a Roth IRA, you don't pay tax on any of it. When you take money out of a non-deductible IRA, you don't pay tax on the withdrawal of your own contribution money, but you do pay tax on the withdrawal of earnings. With a Roth IRA, you don't pay tax on any of it. The problem with a Roth IRA is that not everybody qualifies, whereas nearly everyone qualifies for a non-deductible IRA. So, a Roth IRA is always there. Let's make sure we understand clearly. The money you put in a non-deductible IRA is not deductible. When you take money out of the account, you don't pay tax on the return of your own investment, but you do pay tax on the return of earnings. By the way, if you withdraw before the age of fifty-nine and a half, you even have a ten percent penalty on those earnings. In addition, for the year 2009, you are allowed to contribute up to five thousand dollars. If you're over the age of 49 on December 31st, 2009, you can put an additional $1,000. You may contribute for the year 2009 until April 15th, 2010. Now, there is one other reason to have a non-deductible IRA. If you have both a...
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8606 is not required when the taxpayer Form: What You Should Know
Tax Guide for Non-Filing Nondeductible IRA Contribution Use the following questions to figure your deductible contribution: What is the total deductible contribution for 2024 (i.e., 50), which you contributed to a traditional IRA in 2024 and 2018? What is the difference between the amount you reported and the amount you deducted in 2024 and 2018? This difference is your “deductible contribution amount.” What is the total deductible contribution for 2024 (i.e., 50), which you contributed to a traditional IRA in 2024 and 2018? What is the difference between the amount you reported and the amount you deducted in 2024 and 2018? This difference is your “deductible contribution amount.” What is the total deductible contribution for 2024 (i.e., 50), which you contributed to a non-deductible IRA in 2024 and 2018? What is the difference between the amount you reported and the amount you deducted in 2024 and 2018? This difference is your “deductible contribution amount.” See IRS Publication 590 for detailed guidance on the non-deductible contributions that you must report on Form 8606. The IRS website also has a list of IRS questions that you can use to help determine your deductible contribution amount. Don’t worry about having to file a tax return if you failed to fill out Form 8606 correctly. The IRS may fine you up to the amount of your excess deductible contribution. If you believe you are in good standing and don't owe any taxes, simply contact the Department of Treasury, you may receive a refund of any taxes owed if you request it.
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