Instructions For Form 8606 - Nondeductible Iras

•

2003 and 2004 reflecting the

Page 1 of Forms 1040 (or Forms

Return of Excess

additional 6% tax on excess

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

Traditional IRA

contributions on Form 5329. You

each year you made a nondeductible

include the $6,000 distribution on

contribution to a traditional IRA.

Contributions

•

your 2005 Form 1040, line 15a, enter

Forms 8606 and any supporting

The return (distribution) in 2005 of

-0- on line 15b, and attach a

statements, attachments, and

excess traditional IRA contributions

statement to your return explaining

worksheets for all applicable years.

•

for years prior to 2005 is not taxable if

the distribution, including the fact that

Forms 5498 or similar statements

all three of the following apply.

you filed amended returns for 2003

you received each year showing

and 2004 and paid the additional 6%

contributions you made to a

1. The distribution was made after

tax on the excess contributions for

traditional IRA or Roth IRA.

the due date, including extensions, of

•

those years. The statement indicates

Forms 5498 or similar statements

your tax return for the year for which

that the distribution is not taxable

you received showing the value of

the contribution was made (if the

because (a) it was made after the due

your traditional IRAs for each year

distribution was made earlier, see

dates of your 2003 and 2004 tax

you received a distribution.

Return of IRA Contributions on

•

returns, including extensions, (b) your

Forms 1099-R or W-2P you

page 4).

total IRA contributions did not exceed

received for each year you received a

2. The total contributions

$3,000 ($3,500 if age 50 or older at

distribution.

(excluding rollovers and conversions)

the end of 2003) for 2003 or $3,000

to your traditional and SEP IRAs for

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

($3,500 if age 50 or older at the end

the year for which the excess

forms that were used in prior years.

of 2004) for 2004, and (c) you did not

contribution was made did not

take a deduction for the contributions,

exceed:

and no deduction was allowable

a. $3,000 ($3,500 if age 50 or

Specific Instructions

because you did not have any taxable

older at the end of the year) for years

compensation for those years. The

after 2001 and before 2005,

Name and social security number

statement also indicates that the

b. $2,000 for years after 1996 and

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

distribution reduced your excess

before 2002, or

only the name and SSN of the

contributions to -0-, as reflected on

c. $2,250 for years before 1997.

spouse whose information is being

your 2005 Form 5329 and it indicates

If your total IRA contributions for

reported on Form 8606. If both you

your adjusted basis in nondeductible

the year included employer

and your spouse are required to file

contributions.

contributions to a SEP IRA, increase

Form 8606, file a separate Form 8606

the $3,000 ($3,500, if applicable),

for each of you.

Amending Form 8606

$2,000, or $2,250 by the smaller of

the employer contributions or $40,000

After you file your return, you can

Part I—Nondeductible

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

change a nondeductible contribution

Contributions to

years before 2001).

to a traditional IRA to a deductible

3. No deduction was allowable

contribution or vice versa. You also

Traditional IRAs and

(without regard to the modified AGI

may be able to make a

Distributions From

limitation) or taken for the excess

recharacterization (see page 3). If

contributions.

necessary, complete a new Form

Traditional, SEP, and

8606 showing the revised information

Include the total amount distributed

SIMPLE IRAs

and file it with Form 1040X, Amended

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

U.S. Individual Income Tax Return.

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

Line 1

and attach a statement to your return

Penalty for Not Filing

If you used the IRA Deduction

explaining the distribution. See the

Worksheet in the Form 1040 or

If you are required to file Form 8606

example in the next column.

1040A instructions, subtract line 10 of

to report a nondeductible contribution

If you meet these conditions and

the worksheet (or the amount you

to a traditional IRA for 2005, but do

are otherwise required to file Form

chose to deduct on Form 1040, line

not do so, you must pay a $50

8606:

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

•

penalty, unless you can show

Do not take into account the

from the smaller of line 8 or line 9 of

reasonable cause.

amount of the withdrawn

the worksheet. Enter the result on line

contributions in figuring line 2 and

1 of Form 8606. You cannot deduct

•

Overstatement Penalty

Do not include the amount of the

the amount included on line 1.

withdrawn contributions on line 7.

If you overstate your nondeductible

If you used the worksheet Figuring

contributions, you must pay a $100

Example. You are single, you

Your Reduced IRA Deduction for

penalty, unless you can show

retired in 2002, and you had no

2005 in Pub. 590, enter on line 1 of

reasonable cause.

taxable compensation after 2002.

Form 8606 any nondeductible

However, you made traditional IRA

contributions from the appropriate

What Records Must I

contributions (that you did not deduct)

lines of that worksheet.

of $3,000 in 2003 and $3,000 in

Keep?

2004. In November 2005, a tax

If you did not have any deductible

practitioner informed you that you had

To verify the nontaxable part of

contributions, you can make

made excess contributions for those

distributions from your IRAs, including

nondeductible contributions up to

years because you had no taxable

Roth IRAs, keep a copy of the

your contribution limit. Enter on line 1

compensation. You withdrew the

following forms and records until all

of Form 8606 your nondeductible

$6,000 and filed amended returns for

distributions are made.

contributions.

-5-

Instructions For Form 8606 - Nondeductible Iras - 2005 Page 5

Related Articles

Related forms

Related Categories