Instructions For Form 8606 - Nondeductible Iras

Part I—Nondeductible

a. $5,000 ($6,000 if age 50 or older

you did not take a deduction for the

at the end of the year) for 2008 or

contributions, and no deduction was

Contributions to

2009,

allowable because you did not have

any taxable compensation for those

b. $4,000 ($5,000 if age 50 or older

Traditional IRAs and

years. The statement also indicates that

at the end of the year) for 2007 or

Distributions From

the distribution reduced your excess

2006,

contributions to -0-, as reflected on your

c. $4,000 ($4,500 if age 50 or older

Traditional, SEP, and

2010 Form 5329.

at the end of the year) for 2005,

SIMPLE IRAs

d. $3,000 ($3,500 if age 50 or older

Amending Form 8606

at the end of the year) for years after

2001 and before 2005,

Line 1

After you file your return, you can

e. $2,000 for years after 1996 and

change a nondeductible contribution to

If you used the IRA Deduction

before 2002, or

a traditional IRA to a deductible

Worksheet in the Form 1040, 1040NR,

f. $2,250 for years before 1997.

contribution or vice versa. You also

or 1040A instructions, subtract line 12

may be able to make a

If your total IRA contributions for the

(line 10 for Form 1040A) of the

recharacterization (see page 3). If

year included employer contributions to

worksheet (or the amount you chose to

necessary, complete a new Form 8606

a SEP IRA, increase the $5,000

deduct on Form 1040 or Form 1040NR,

showing the revised information and file

($6,000, if applicable), $4,000 ($5,000

line 32, or Form 1040A, line 17, if less)

it with Form 1040X, Amended U.S.

or $4,500, if applicable), $3,000

from the smaller of line 10 or line 11

Individual Income Tax Return.

($3,500, if applicable), $2,000, or

(line 8 or line 9 for Form 1040A) of the

$2,250 by the smaller of the employer

worksheet. Enter the result on line 1 of

Penalty for Not Filing

contributions or $49,000 ($46,000 for

Form 8606. You cannot deduct the

2008, $45,000 for 2007, $44,000 for

amount included on line 1.

If you are required to file Form 8606 to

2006, $42,000 for 2005, $41,000 for

report a nondeductible contribution to a

2004, $40,000 for 2003 and 2002,

If you used the worksheet Figuring

traditional IRA for 2010, but do not do

$35,000 for 2001, or $30,000 for years

Your Reduced IRA Deduction for 2010

so, you must pay a $50 penalty, unless

before 2001).

in Pub. 590, enter on line 1 of Form

you can show reasonable cause.

3. No deduction was allowable

8606 any nondeductible contributions

(without regard to the modified AGI

from the appropriate lines of that

Overstatement Penalty

limitation) or taken for the excess

worksheet.

contributions.

If you overstate your nondeductible

contributions, you must pay a $100

If you did not have any deductible

Include the total amount distributed

penalty, unless you can show

contributions, you can make

on Form 1040, line 15a; Form 1040A,

reasonable cause.

nondeductible contributions up to your

line 11a; or Form 1040NR, line 16a;

contribution limit. Enter on line 1 of

and attach a statement to your return

What Records Must I

Form 8606 your nondeductible

explaining the distribution. See the

contributions.

Keep?

example below.

Include on line 1 any repayment of a

To verify the nontaxable part of

If you meet these conditions and are

qualified reservist distribution. Also,

distributions from your IRAs, including

otherwise required to file Form 8606:

include any repayment of a qualified

Roth IRAs, keep a copy of the following

•

Do not take into account the amount

disaster recovery assistance or

forms and records until all distributions

of the withdrawn contributions in

qualified recovery assistance

are made.

figuring line 2, and

•

distribution that is attributable to

Page 1 of Forms 1040 (or Forms

•

Do not include the amount of the

previously nondeductible contributions.

1040A, 1040NR, or 1040-T) filed for

withdrawn contributions on line 7.

each year you made a nondeductible

Do not include on line 1 contributions

contribution to a traditional IRA.

Example. You are single, you

•

that you had returned to you with the

Forms 8606 and any supporting

retired in 2007, and you had no taxable

related earnings (or less any loss). See

statements, attachments, and

compensation after 2007. However, you

page 4.

worksheets for all applicable years.

made traditional IRA contributions (that

•

Forms 5498 or similar statements

you did not deduct) of $3,000 in 2008

Line 2

you received each year showing

and $4,000 in 2009. In November 2010,

contributions you made to a traditional

a tax practitioner informed you that you

If this is the first year you are required

IRA or Roth IRA.

had made excess contributions for

to file Form 8606, enter -0-. Otherwise,

•

Forms 5498 or similar statements

those years because you had no

use the chart on page 6 to find the

you received showing the value of your

taxable compensation. You withdrew

amount to enter on line 2.

traditional IRAs for each year you

the $7,000 and filed amended returns

received a distribution.

for 2008 and 2009 reflecting the

However, if you are required to file

•

Forms 1099-R or W-2P you received

additional 6% tax on excess

this year, you may need to enter an

for each year you received a

contributions on Form 5329. You

amount other than -0- or adjust the

distribution.

include the $7,000 distribution on your

amount from the chart if your basis

2010 Form 1040, line 15a, enter -0- on

changed because of any of the

Note. Forms 1040-T and W-2P are

line 15b, and attach a statement to your

following.

forms that were used in prior years.

return explaining the distribution,

•

You had a return of excess traditional

including the fact that you filed

IRA contributions (see page 4).

amended returns for 2008 and 2009

•

Specific Instructions

Incident to divorce, you transferred or

and paid the additional 6% tax on the

received part or all of a traditional IRA

excess contributions for those years.

(see the last bulleted item under Line 7

Name and social security number

The statement indicates that the

on page 6).

distribution is not taxable because (a) it

(SSN). If you file a joint return, enter

•

You rolled over any nontaxable

was made after the due dates of your

only the name and SSN of the spouse

portion of your qualified retirement plan

2008 and 2009 tax returns, including

whose information is being reported on

to a traditional or SEP IRA that was not

extensions, (b) your total IRA

Form 8606. If both you and your

previously reported on Form 8606, line

contributions for each year did not

spouse are required to file Form 8606,

2. Include the nontaxable portion on

exceed $5,000 ($6,000 if age 50 or

file a separate Form 8606 for each of

line 2.

older at the end of the year), and (c)

you.

-5-

Instructions for Form 8606 (2010)

Instructions For Form 8606 - Nondeductible Iras - 2010 Page 5

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