Instructions For Form 8606 - Nondeductible Iras

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Basis. Your basis in traditional IRAs is

Contributions can be made after the

Use the Maximum Roth IRA

the total of all your nondeductible

owner reaches age 70

Contribution Worksheet below to figure

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No minimum distributions are

the maximum amount you can

contributions and nontaxable amounts

included in rollovers made to traditional

required during the Roth IRA owner’s

contribute to a Roth IRA for 2010. If you

lifetime.

are married filing jointly, complete the

IRAs minus the total of all your

•

Qualified distributions are generally

worksheet separately for you and your

nontaxable distributions, adjusted if

not includible in income. However, see

spouse.

necessary (see the instructions for line

Certain qualified distributions on page 7

2 on page 5).

If you contributed too much, see

for an exception.

Recharacterizations on page 3.

Keep track of your basis to

Qualified distribution. Generally, a

CAUTION

figure the nontaxable part of

qualified distribution is any distribution

Modified AGI for Roth IRA purposes.

your future distributions.

CAUTION

made:

First, figure your AGI (Form 1040, line

SEP IRAs

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38; Form 1040A, line 22; or Form

On or after age 59

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1040NR, line 37). Then, refigure it by:

Upon death,

A simplified employee pension (SEP) is

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1. Subtracting the following.

Due to disability, or

an employer-sponsored plan under

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a. Roth IRA conversions included

For qualified first-time homebuyer

which an employer can make

expenses.

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

contributions to traditional IRAs for its

line 11b; or Form 1040NR, line 16b.

employees. If you make contributions to

Exception. Any distribution made

b. Roth IRA rollovers from qualified

that IRA (excluding employer

during the 5-year period beginning with

retirement plans included on Form

contributions you make if you are

the first year for which you made a

1040, line 16b; Form 1040A, line 12b;

self-employed), they are treated as

Roth IRA contribution or conversion

or Form 1040NR, line 17b.

contributions to a traditional IRA and

(rollover in the case of a qualified

may be deductible or nondeductible.

2. Adding the following.

retirement plan) is not a qualified

SEP IRA distributions are reported in

a. IRA deduction from Form 1040,

distribution, and may be taxable.

line 32; Form 1040A, line 17; or Form

the same manner as traditional IRA

Contributions. You can contribute to

distributions.

1040NR, line 32.

a Roth IRA for 2010 only if your 2010

b. Student loan interest deduction

SIMPLE IRAs

modified adjusted gross income (AGI)

from Form 1040, line 33; Form 1040A,

for Roth IRA purposes is less than:

line 18; or Form 1040NR, line 33.

Your participation in your employer’s

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$10,000 if married filing separately

c. Domestic production activities

SIMPLE IRA plan does not prevent you

and you lived with your spouse at any

deduction from Form 1040, line 35; or

from making contributions to a

time in 2010,

Form 1040NR, line 34.

traditional or Roth IRA.

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$177,000 if married filing jointly or

d. Exclusion of interest from Form

qualifying widow(er), or

8815, Exclusion of Interest From Series

Roth IRAs

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$120,000 if single, head of

EE and I U.S. Savings Bonds Issued

A Roth IRA is similar to a traditional

household, or if married filing

After 1989.

IRA, but has the following features.

separately and you did not live with

e. Exclusion of employer-provided

•

Contributions are never deductible.

your spouse at any time in 2010.

adoption benefits from Form 8839,

Qualified Adoption Expenses.

f. Foreign earned income exclusion

from Form 2555, Foreign Earned

Maximum Roth IRA Contribution Worksheet (keep for your records)

Income, or Form 2555-EZ, Foreign

Earned Income Exclusion.

Caution: If married filing jointly and the combined taxable compensation (defined on page

g. Foreign housing exclusion or

3) for you and your spouse is less than $10,000 ($11,000 if one spouse is 50 or older at

deduction from Form 2555.

the end of 2010; $12,000 if both spouses are 50 or older at the end of 2010), do not use

this worksheet. Instead, see Pub. 590 for special rules.

At the time these instructions

1. If married filing jointly, enter $5,000 ($6,000 if age 50 or older at

went to print, Congress was

the end of 2010). All others, enter the smaller of $5,000

considering legislation that

CAUTION

($6,000 if age 50 or older at the end of 2010) or your taxable

would extend the deduction for tuition

compensation (defined on page 3) . . . . . . . . . . . . . . . . . . . .

and fees. To find out if this legislation

was enacted, and for more details, go

2. Enter your total contributions to traditional IRAs for 2010 . . . . .

3. Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . .

4. Enter: $177,000 if married filing jointly or qualifying widow(er);

When figuring modified AGI for

$10,000 if married filing separately and you lived with your

Roth IRA purposes, you may

spouse at any time in 2010. All others, enter $120,000 . . . . . .

have to refigure items based on

CAUTION

5. Enter your modified AGI for Roth IRA purposes (see this page)

modified AGI, such as taxable social

6. Subtract line 5 from line 4. If zero or less, stop here; you may

security benefits and passive activity

not contribute to a Roth IRA for 2010. See

losses allowed under the special

Recharacterizations on page 3 if you made Roth IRA

allowance for rental real estate

contributions for 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

activities. See Can You Contribute to a

Roth IRA? in Pub. 590 for details.

7. If line 4 above is $120,000, enter $15,000; otherwise, enter

$10,000. If line 6 is more than or equal to line 7, skip lines 8 and

Distributions. See the instructions for

9 and enter the amount from line 3 on line 10 . . . . . . . . . . . .

Part IV on page 7.

8. Divide line 6 by line 7 and enter the result as a decimal

Overall Contribution Limit for

(rounded to at least 3 places). If the result is 1.000 or more,

Traditional and Roth IRAs

enter 1.000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9. Multiply line 1 by line 8. If the result is not a multiple of $10,

If you are not married filing jointly, your

increase it to the next multiple of $10 (for example, increase

limit on contributions to traditional and

$490.30 to $500). Enter the result, but not less than $200 . . . .

Roth IRAs is the smaller of $5,000

10. Maximum 2010 Roth IRA Contribution. Enter the smaller of

($6,000 if age 50 or older at the end of

line 3 or line 9. See Recharacterizations on page 3 if you

2010) or your taxable compensation

contributed more than this amount to Roth IRAs for 2010 . . . .

10.

(defined on page 3). If you are married

filing jointly, your contribution limit is

-2-

Instructions for Form 8606 (2010)

Instructions For Form 8606 - Nondeductible Iras - 2010 Page 2

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