Instructions For Form 8606 - Nondeductible Iras

Amending Form 8606

Part I—Nondeductible

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

at the end of the year) for years after

Contributions to

After you file your return, you can

2001 and before 2005,

change a nondeductible contribution to

e. $2,000 for years after 1996 and

Traditional IRAs and

a traditional IRA to a deductible

before 2002, or

Distributions From

contribution or vice versa. You also

f. $2,250 for years before 1997.

may be able to make a

If your total IRA contributions for the

Traditional, SEP, and

recharacterization (see page 3). If

year included employer contributions to

necessary, complete a new Form 8606

SIMPLE IRAs

a SEP IRA, increase the $5,000

showing the revised information and file

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

it with Form 1040X, Amended U.S.

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

Line 1

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

Individual Income Tax Return.

If you used the IRA Deduction

$2,250 by the smaller of the employer

Worksheet in the Form 1040, 1040NR,

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

Penalty for Not Filing

or 1040A instructions, subtract line 12

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

(line 10 for Form 1040A) of the

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

If you are required to file Form 8606 to

worksheet (or the amount you chose to

2004, $40,000 for 2003 and 2002,

report a nondeductible contribution to a

deduct on Form 1040 or Form 1040NR,

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

traditional IRA for 2010, but do not do

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

before 2001).

so, you must pay a $50 penalty, unless

from the smaller of line 10 or line 11

3. No deduction was allowable

you can show reasonable cause.

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

(without regard to the modified AGI

worksheet. Enter the result on line 1 of

limitation) or taken for the excess

Form 8606. You cannot deduct the

contributions.

Overstatement Penalty

amount included on line 1.

If you overstate your nondeductible

Include the total amount distributed

If you used the worksheet Figuring

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

contributions, you must pay a $100

Your Reduced IRA Deduction for 2010

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

penalty, unless you can show

in Pub. 590, enter on line 1 of Form

and attach a statement to your return

reasonable cause.

8606 any nondeductible contributions

explaining the distribution. See the

from the appropriate lines of that

example below.

worksheet.

What Records Must I

If you meet these conditions and are

If you did not have any deductible

Keep?

otherwise required to file Form 8606:

•

contributions, you can make

Do not take into account the amount

To verify the nontaxable part of

nondeductible contributions up to your

of the withdrawn contributions in

distributions from your IRAs, including

contribution limit. Enter on line 1 of

figuring line 2, and

•

Roth IRAs, keep a copy of the following

Form 8606 your nondeductible

Do not include the amount of the

contributions.

forms and records until all distributions

withdrawn contributions on line 7.

are made.

Example. You are single, you

Include on line 1 any repayment of a

•

Page 1 of Forms 1040 (or Forms

retired in 2007, and you had no taxable

qualified reservist distribution. Also,

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

compensation after 2007. However, you

include any repayment of a qualified

each year you made a nondeductible

made traditional IRA contributions (that

disaster recovery assistance or

contribution to a traditional IRA.

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

qualified recovery assistance

•

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

distribution that is attributable to

Forms 8606 and any supporting

a tax practitioner informed you that you

previously nondeductible contributions.

statements, attachments, and

had made excess contributions for

worksheets for all applicable years.

Do not include on line 1 contributions

those years because you had no

•

Forms 5498 or similar statements

that you had returned to you with the

taxable compensation. You withdrew

you received each year showing

related earnings (or less any loss). See

the $7,000 and filed amended returns

contributions you made to a traditional

page 4.

for 2008 and 2009 reflecting the

IRA or Roth IRA.

additional 6% tax on excess

•

contributions on Form 5329. You

Line 2

Forms 5498 or similar statements

include the $7,000 distribution on your

you received showing the value of your

If this is the first year you are required

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

traditional IRAs for each year you

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

line 15b, and attach a statement to your

received a distribution.

use the chart on page 6 to find the

return explaining the distribution,

•

amount to enter on line 2.

Forms 1099-R or W-2P you received

including the fact that you filed

for each year you received a

amended returns for 2008 and 2009

However, if you are required to file

distribution.

and paid the additional 6% tax on the

this year, you may need to enter an

excess contributions for those years.

amount other than -0- or adjust the

The statement indicates that the

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

amount from the chart if your basis

distribution is not taxable because (a) it

forms that were used in prior years.

changed because of any of the

was made after the due dates of your

following.

2008 and 2009 tax returns, including

•

You had a return of excess traditional

extensions, (b) your total IRA

IRA contributions (see page 4).

contributions for each year did not

Specific Instructions

•

Incident to divorce, you transferred or

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

received part or all of a traditional IRA

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

Name and social security number

(see the last bulleted item under Line 7

you did not take a deduction for the

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

on page 6).

contributions, and no deduction was

only the name and SSN of the spouse

•

You rolled over any nontaxable

allowable because you did not have

whose information is being reported on

portion of your qualified retirement plan

any taxable compensation for those

Form 8606. If both you and your

to a traditional or SEP IRA that was not

years. The statement also indicates that

spouse are required to file Form 8606,

previously reported on Form 8606, line

the distribution reduced your excess

file a separate Form 8606 for each of

2. Include the nontaxable portion on

contributions to -0-, as reflected on your

line 2.

2010 Form 5329.

you.

-5-

Instructions for Form 8606 (2010)

Instructions For Form 8606 - Nondeductible Iras - 2010 Page 5

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