Instructions For Form 8606 - Nondeductible Iras

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

it with Form 1040X, Amended U.S.

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

$2,250 by the smaller of the employer

Individual Income Tax Return.

less) from the smaller of line 10 or line

contributions or $46,000 ($45,000 for

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

2007, $44,000 for 2006, $42,000 for

the worksheet. Enter the result on line 1

Penalty for Not Filing

2005, $41,000 for 2004, $40,000 for

of Form 8606. You cannot deduct the

If you are required to file Form 8606 to

2003 and 2002, $35,000 for 2001, or

amount included on line 1.

report a nondeductible contribution to a

$30,000 for years before 2001).

If you used the worksheet Figuring

traditional IRA for 2009, but do not do

3. No deduction was allowable

Your Reduced IRA Deduction for 2009

so, you must pay a $50 penalty, unless

(without regard to the modified AGI

in Pub. 590, enter on line 1 of Form

you can show reasonable cause.

limitation) or taken for the excess

8606 any nondeductible contributions

contributions.

from the appropriate lines of that

Overstatement Penalty

worksheet.

Include the total amount distributed

If you overstate your nondeductible

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

If you did not have any deductible

contributions, you must pay a $100

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

contributions, you can make

penalty, unless you can show

and attach a statement to your return

nondeductible contributions up to your

reasonable cause.

explaining the distribution. See the

contribution limit. Enter on line 1 of

example below.

Form 8606 your nondeductible

What Records Must I

If you meet these conditions and are

contributions.

otherwise required to file Form 8606:

Keep?

•

Include on line 1 any repayment of a

Do not take into account the amount

To verify the nontaxable part of

qualified reservist distribution. Also,

of the withdrawn contributions in

distributions from your IRAs, including

include any repayment of a qualified

figuring line 2, and

•

Roth IRAs, keep a copy of the following

hurricane, disaster recovery assistance,

Do not include the amount of the

forms and records until all distributions

or recovery assistance distribution that

withdrawn contributions on line 7.

are made.

is attributable to previously

•

Example. You are single, you

Page 1 of Forms 1040 (or Forms

nondeductible contributions.

retired in 2006, and you had no taxable

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

compensation after 2006. However, you

Do not include on line 1 contributions

each year you made a nondeductible

made traditional IRA contributions (that

that you had returned to you with the

contribution to a traditional IRA.

•

you did not deduct) of $3,000 in 2007

related earnings (or less any loss). See

Forms 8606 and any supporting

and $4,000 in 2008. In November 2009,

page 4.

statements, attachments, and

a tax practitioner informed you that you

worksheets for all applicable years.

•

Line 2

had made excess contributions for

Forms 5498 or similar statements

those years because you had no

you received each year showing

If this is the first year you are required

taxable compensation. You withdrew

contributions you made to a traditional

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

the $7,000 and filed amended returns

IRA or Roth IRA.

use the chart below to find the amount

•

for 2007 and 2008 reflecting the

Forms 5498 or similar statements

to enter on line 2.

additional 6% tax on excess

you received showing the value of your

contributions on Form 5329. You

However, you may need to enter an

traditional IRAs for each year you

include the $7,000 distribution on your

amount other than -0- or adjust the

received a distribution.

•

2009 Form 1040, line 15a, enter -0- on

amount from the chart if your basis

Forms 1099-R or W-2P you received

changed because of any of the

line 15b, and attach a statement to your

for each year you received a

return explaining the distribution,

following.

distribution.

•

including the fact that you filed

You had a return of excess traditional

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

IRA contributions (see page 4).

amended returns for 2007 and 2008

•

forms that were used in prior years.

and paid the additional 6% tax on the

Incident to divorce, you transferred or

excess contributions for those years.

received part or all of a traditional IRA

(see the last bulleted item under Line 7

The statement indicates that the

distribution is not taxable because (a) it

on page 6).

Specific Instructions

•

was made after the due dates of your

You rolled over any nontaxable

portion of your qualified employer plan

2007 and 2008 tax returns, including

Name and social security number

extensions, (b) your total IRA

to a traditional or SEP IRA. Include the

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

contributions did not exceed $4,000

nontaxable portion on line 2.

only the name and SSN of the spouse

($5,000 if age 50 or older at the end of

whose information is being reported on

IF the last Form

THEN enter on line

the year) for 2007 or $5,000 ($6,000 if

Form 8606. If both you and your

8606 you filed was 2...

age 50 or older at the end of the year)

spouse are required to file Form 8606,

for...

for 2008, and (c) you did not take a

file a separate Form 8606 for each of

deduction for the contributions, and no

you.

A year after 2000

The amount from

deduction was allowable because you

and before 2009

line 14 of that Form

did not have any taxable compensation

8606

Part I—Nondeductible

for those years. The statement also

A year after 1992

The amount from

indicates that the distribution reduced

Contributions to

and before 2001

line 12 of that Form

your excess contributions to -0-, as

8606

Traditional IRAs and

reflected on your 2009 Form 5329 and

it indicates your adjusted basis in

A year after 1988

The amount from

Distributions From

nondeductible contributions.

and before 1993

line 14 of that Form

Traditional, SEP, and

8606

Amending Form 8606

SIMPLE IRAs

1988

The total of the

After you file your return, you can

amounts on lines 7

change a nondeductible contribution to

and 16 of that Form

Line 1

a traditional IRA to a deductible

8606

contribution or vice versa. You also

If you used the IRA Deduction

1987

The total of the

may be able to make a

Worksheet in the Form 1040 or 1040A

amounts on lines 4

recharacterization (see page 3). If

instructions, subtract line 12 (line 10 for

and 13 of that Form

necessary, complete a new Form 8606

Form 1040A) of the worksheet (or the

8606

showing the revised information and file

amount you chose to deduct on Form

-5-

Instructions for Form 8606 (2009)

Instructions For Form 8606 - Nondeductible Iras - 2009 Page 5

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