Instructions For Form 8606 - Nondeductible Iras

to a traditional or SEP IRA. Include the

Amending Form 8606

nontaxable portion on

After you file your return, you can

line 2.

Specific Instructions

change a nondeductible contribution to

a traditional IRA to a deductible

IF the last Form

THEN enter on line

Name and social security number

contribution or vice versa. You also

8606 you filed was 2...

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

may be able to make a

for...

only the name and SSN of the spouse

recharacterization (see page 3). If

whose information is being reported on

2005, 2004, 2003,

The amount from

necessary, complete a new Form 8606

Form 8606. If both you and your

2002, or 2001

line 14 of that Form

showing the revised information and file

spouse are required to file Form 8606,

8606

it with Form 1040X, Amended U.S.

file a separate Form 8606 for each of

Individual Income Tax Return.

A year after 1992

The amount from

you.

and before 2001

line 12 of that Form

Penalty for Not Filing

8606

Part I—Nondeductible

If you are required to file Form 8606 to

A year after 1988

The amount from

Contributions to

report a nondeductible contribution to a

and before 1993

line 14 of that Form

traditional IRA for 2006, but do not do

8606

Traditional IRAs and

so, you must pay a $50 penalty, unless

1988

The total of the

Distributions From

you can show reasonable cause.

amounts on lines 7

Traditional, SEP, and

and 16 of that Form

Overstatement Penalty

8606

SIMPLE IRAs

If you overstate your nondeductible

1987

The total of the

contributions, you must pay a $100

amounts on lines 4

Line 1

penalty, unless you can show

and 13 of that Form

reasonable cause.

If you used the IRA Deduction

8606

Worksheet in the Form 1040 or 1040A

What Records Must I

instructions, subtract line 12 (line 10 for

Line 4

Form 1040A) of the worksheet (or the

Keep?

amount you chose to deduct on Form

If you made contributions to traditional

To verify the nontaxable part of

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

IRAs for 2006 in 2006 and 2007 and

distributions from your IRAs, including

less) from the smaller of line 10 or line

you have both deductible and

Roth IRAs, keep a copy of the following

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

nondeductible contributions, you can

forms and records until all distributions

the worksheet. Enter the result on line 1

choose to treat the contributions made

are made.

of Form 8606. You cannot deduct the

•

in 2006 first as nondeductible

Page 1 of Forms 1040 (or Forms

amount included on line 1.

contributions and then as deductible

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

contributions, or vice versa. But the

If you used the worksheet Figuring

each year you made a nondeductible

amount on line 4 cannot be less than

Your Reduced IRA Deduction for 2006

contribution to a traditional IRA.

•

the excess, if any, of the amount on line

in Pub. 590, enter on line 1 of Form

Forms 8606 and any supporting

1 over the contributions you actually

8606 any nondeductible contributions

statements, attachments, and

made in 2006.

from the appropriate lines of that

worksheets for all applicable years.

•

worksheet.

Forms 5498 or similar statements

Example. You made contributions

you received each year showing

If you did not have any deductible

for 2006 of $2,000 in May 2006 and

contributions you made to a traditional

contributions, you can make

$2,000 in January 2007, of which

IRA or Roth IRA.

nondeductible contributions up to your

$3,000 are deductible and $1,000 are

•

contribution limit. Enter on line 1 of

Forms 5498 or similar statements

nondeductible. You choose $1,000 of

you received showing the value of your

Form 8606 your nondeductible

your contribution in 2006 to be

traditional IRAs for each year you

contributions.

nondeductible. You enter the $1,000 on

received a distribution.

line 1, but not line 4, and it becomes

Do not include on line 1 contributions

•

Forms 1099-R or W-2P you received

part of your basis for 2006.

that you had returned to you with the

for each year you received a

related earnings (or less any loss). See

Although the contributions to

distribution.

page 4.

traditional IRAs for 2006 that you made

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

from January 1, 2007, through April 16,

Line 2

forms that were used in prior years.

2007, can be treated as nondeductible,

If this is the first year you are required

they are not included in figuring the

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

nontaxable part of any distributions you

use the chart in the next column to find

received in 2006.

the amount to enter on line 2.

Line 6

However, you may need to enter an

amount other than -0- or adjust the

Enter the total value of all your

amount from the chart if your basis

traditional, SEP, and SIMPLE IRAs as

changed because of any of the

of December 31, 2006, plus any

following.

outstanding rollovers. A statement

•

You had a return of excess traditional

should be sent to you by January 31,

IRA contributions (see page 4).

2007, showing the value of each IRA

•

Incident to divorce, you transferred or

on December 31, 2006. However, if you

received part or all of a traditional IRA

recharacterized any amounts, enter on

(see the last bulleted item under Line 7

line 6 the total value taking into account

on the next page).

all recharacterizations, including

•

You rolled over any nontaxable

recharacterizations made after

portion of your qualified employer plan

December 31, 2006.

-5-

Instructions For Form 8606 - Nondeductible Iras - 2006 Page 5

Related Articles

Related forms

Related Categories