Instructions For Form 8606 - Nondeductible Iras

2 0 07

Department of the Treasury

Internal Revenue Service

Instructions for Form 8606

Nondeductible IRAs

Section references are to the Internal

If you received distributions from

required to file an income tax return but

TIP

a traditional, SEP, or SIMPLE

are required to file Form 8606, sign

Revenue Code unless otherwise noted.

IRA in 2007 and you have never

Form 8606 and send it to the Internal

General Instructions

made nondeductible contributions to

Revenue Service at the same time and

traditional IRAs, do not report the

place you would otherwise file Form

distributions on Form 8606. Instead,

1040, 1040A, or 1040NR.

What’s New

see the instructions for Form 1040,

Modified AGI limit for Roth IRA

lines 15a and 15b; Form 1040A, lines

Definitions

contributions increased. You can

11a and 11b; or Form 1040NR, lines

contribute to a Roth IRA for 2007 only if

16a and 16b. Also, to find out if any of

Deemed IRAs

your 2007 modified adjusted gross

your contributions to traditional IRAs

income (AGI) for Roth IRA purposes is

are deductible, see the instructions for

A qualified employer plan (retirement

less than:

Form 1040, line 32; Form 1040A, line

plan) can maintain a separate account

•

$166,000 if married filing jointly or

17; or Form 1040NR, line 31.

or annuity under the plan (a deemed

qualifying widow(er),

IRA) to receive voluntary employee

•

$114,000 if single, head of

contributions. If in 2007 you had a

Who Must File

household, or married filing separately

deemed IRA, use the rules for either a

File Form 8606 if any of the following

and you did not live with your spouse at

traditional IRA or a Roth IRA depending

apply.

any time in 2007, or

on which type it was. See Pub. 590 for

•

You made nondeductible

$10,000 if married filing separately

more details.

contributions to a traditional IRA for

and you lived with your spouse at any

2007, including a repayment of a

time in 2007.

Traditional IRAs

reservist distribution.

See Roth IRAs on page 2.

•

For purposes of Form 8606, a

You received distributions from a

Qualified health savings account

traditional IRA is an individual

traditional, SEP, or SIMPLE IRA in

(HSA) funding distribution. You can

retirement account or an individual

2007 and your basis in traditional IRAs

elect to make a one-time direct

retirement annuity other than a SEP,

is more than zero. For this purpose, a

trustee-to-trustee transfer from your

SIMPLE, or Roth IRA.

distribution does not include a rollover,

IRA (other than a SIMPLE IRA or a

qualified charitable distribution, a

Contributions. An overall contribution

SEP IRA) to your HSA. The maximum

one-time distribution to fund an HSA,

limit applies to traditional IRAs and

amount you can transfer is the

conversion, recharacterization, or return

Roth IRAs. See Overall Contribution

maximum HSA contribution limit for the

of certain contributions.

Limit for Traditional and Roth IRAs that

year. Generally, the amount transferred

•

You converted an amount from a

begins on page 2. Contributions to a

is not included in your income and the

traditional, SEP, or SIMPLE IRA to a

traditional IRA may be fully deductible,

additional 10% tax on early distributions

Roth IRA in 2007 (unless you

partially deductible, or completely

does not apply. See Pub. 969, Health

recharacterized the entire conversion —

nondeductible.

Savings Accounts and Other

see page 3).

Tax-Favored Health Plans, for details.

•

Basis. Your basis in traditional IRAs is

You received distributions from a

Catch-up contributions in certain

the total of all your nondeductible

Roth IRA in 2007 (other than a rollover,

employer bankruptcies. If you

recharacterization, or return of certain

contributions to traditional IRAs minus

participated in a 401(k) plan and the

the total of all your nontaxable

contributions — see page 6).

•

employer who maintained the plan filed

distributions, adjusted if necessary (see

You made a repayment of a qualified

for bankruptcy in an earlier year, you

hurricane distribution that is attributable

the instructions for line 2 on page 5).

may be able to contribute an additional

Keep track of your basis to figure the

to previously nondeductible

$3,000 to your IRA. See Pub. 590,

nontaxable part of your future

contributions.

Individual Retirement Arrangements

Note. If you recharacterized a 2007

distributions.

(IRAs), for details.

Roth IRA contribution as a traditional

SEP IRAs

IRA contribution, or vice versa, treat the

Purpose of Form

contribution as having been made to

A simplified employee pension (SEP) is

the second IRA, not the first IRA. See

Use Form 8606 to report:

an employer-sponsored plan under

•

page 3.

Nondeductible contributions you

which an employer can make

made to traditional IRAs,

contributions to traditional IRAs for its

•

You do not have to file Form

Distributions from traditional, SEP, or

employees. If you make contributions to

TIP

8606 solely to report regular

SIMPLE IRAs, if you have ever made

that IRA (excluding employer

contributions to Roth IRAs. But

nondeductible contributions to

contributions you make if you are

see What Records Must I Keep? on

traditional IRAs,

self-employed), they are treated as

•

page 5.

Distributions from Roth IRAs, and

contributions to a traditional IRA and

•

Conversions from traditional, SEP, or

may be deductible or nondeductible.

When and Where To File

SIMPLE IRAs to Roth IRAs.

SEP IRA distributions are reported in

Additional information. See Pub.

File Form 8606 with your 2007 Form

the same manner as traditional IRA

590, for more details.

1040, 1040A, or 1040NR. If you are not

distributions.

Cat. No. 25399E

Instructions For Form 8606 - Nondeductible Iras - 2007

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