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2. The total contributions (excluding

contributions for each year did not

file a separate Form 8606 for each of

rollovers) to your traditional and SEP

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

you.

IRAs for the year for which the excess

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

Part I—Nondeductible

contribution was made did not exceed:

you did not take a deduction for the

a. $5,000 ($6,000 if age 50 or older

contributions, and no deduction was

Contributions to

at the end of the year) for 2008 or

allowable because you did not have

Traditional IRAs and

2009,

any taxable compensation for those

b. $4,000 ($5,000 if age 50 or older

years. The statement also indicates that

Distributions From

at the end of the year) for 2007 or

the distribution reduced your excess

2006,

contributions to -0-, as reflected on your

Traditional, SEP, and

c. $4,000 ($4,500 if age 50 or older

2010 Form 5329.

Deleted "it indicates

SIMPLE IRAs

at the end of the year) for 2005,

your adjusted basis....".

Amending Form 8606

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

at the end of the year) for years after

Line 1

After you file your return, you can

2001 and before 2005,

change a nondeductible contribution to

If you used the IRA Deduction

e. $2,000 for years after 1996 and

a traditional IRA to a deductible

Worksheet in the Form 1040, 1040NR,

before 2002, or

contribution or vice versa. You also

or 1040A instructions, subtract line 12

f. $2,250 for years before 1997.

may be able to make a

(line 10 for Form 1040A) of the

If your total IRA contributions for the

recharacterization (see page 3). If

worksheet (or the amount you chose to

year included employer contributions to

necessary, complete a new Form 8606

deduct on Form 1040 or Form 1040NR,

a SEP IRA, increase the $5,000

showing the revised information and file

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

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

it with Form 1040X, Amended U.S.

from the smaller of line 10 or line 11

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

Individual Income Tax Return.

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

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

Penalty for Not Filing

worksheet. Enter the result on line 1 of

$2,250 by the smaller of the employer

Form 8606. You cannot deduct the

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

If you are required to file Form 8606 to

amount included on line 1.

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

report a nondeductible contribution to a

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

If you used the worksheet Figuring

traditional IRA for 2010, but do not do

2004, $40,000 for 2003 and 2002,

Your Reduced IRA Deduction for 2010

so, you must pay a $50 penalty, unless

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

in Pub. 590, enter on line 1 of Form

you can show reasonable cause.

before 2001).

8606 any nondeductible contributions

3. No deduction was allowable

Overstatement Penalty

from the appropriate lines of that

(without regard to the modified AGI

worksheet.

limitation) or taken for the excess

If you overstate your nondeductible

If you did not have any deductible

contributions.

contributions, you must pay a $100

contributions, you can make

penalty, unless you can show

nondeductible contributions up to your

Include the total amount distributed

reasonable cause.

contribution limit. Enter on line 1 of

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

What Records Must I

Form 8606 your nondeductible

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

contributions.

and attach a statement to your return

Keep?

explaining the distribution. See the

Include on line 1 any repayment of a

example below.

To verify the nontaxable part of

qualified reservist distribution. Also,

distributions from your IRAs, including

If you meet these conditions and are

include any repayment of a qualified

Roth IRAs, keep a copy of the following

otherwise required to file Form 8606:

disaster recovery assistance or

Deleted ref. to qual.

•

forms and records until all distributions

hurricane distrib.

Do not take into account the amount

qualified recovery assistance

are made.

of the withdrawn contributions in

distribution that is attributable to

•

Page 1 of Forms 1040 (or Forms

figuring line 2, and

previously nondeductible contributions.

•

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

Do not include the amount of the

Do not include on line 1 contributions

each year you made a nondeductible

withdrawn contributions on line 7.

that you had returned to you with the

contribution to a traditional IRA.

Example. You are single, you

•

related earnings (or less any loss). See

Forms 8606 and any supporting

retired in 2007, and you had no taxable

page 4.

statements, attachments, and

compensation after 2007. However, you

worksheets for all applicable years.

Line 2

made traditional IRA contributions (that

•

Forms 5498 or similar statements

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

you received each year showing

If this is the first year you are required

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

contributions you made to a traditional

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

a tax practitioner informed you that you

IRA or Roth IRA.

use the chart on page 6 to find the

had made excess contributions for

•

Forms 5498 or similar statements

amount to enter on line 2.

those years because you had no

you received showing the value of your

taxable compensation. You withdrew

However, if you are required to file

traditional IRAs for each year you

the $7,000 and filed amended returns

this year, you may need to enter an

received a distribution.

for 2008 and 2009 reflecting the

•

amount other than -0- or adjust the

Forms 1099-R or W-2P you received

additional 6% tax on excess

amount from the chart if your basis

for each year you received a

contributions on Form 5329. You

changed because of any of the

distribution.

include the $7,000 distribution on your

following.

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

•

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

You had a return of excess traditional

forms that were used in prior years.

line 15b, and attach a statement to your

IRA contributions (see page 4).

•

return explaining the distribution,

Incident to divorce, you transferred or

including the fact that you filed

received part or all of a traditional IRA

Specific Instructions

amended returns for 2008 and 2009

(see the last bulleted item under Line 7

and paid the additional 6% tax on the

on page 6).

•

Name and social security number

excess contributions for those years.

You rolled over any nontaxable

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

The statement indicates that the

portion of your qualified retirement plan

distribution is not taxable because (a) it

only the name and SSN of the spouse

to a traditional or SEP IRA that was not

was made after the due dates of your

whose information is being reported on

previously reported on Form 8606, line

2008 and 2009 tax returns, including

Form 8606. If both you and your

2. Include the nontaxable portion on

extensions, (b) your total IRA

spouse are required to file Form 8606,

line 2.

-5-

Instructions for Form 8606 (2010)

Description Of Major Changes And Instructions For Form 8606 - Nondeductible Iras - 2010 Page 7

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