Form 8606: Non-deductible IRA Contributions

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I know tax day is less than a week away but this is a last minute reminder for everyone who made a nondeductible contribution to an IRA – don’t for Form 8606. Form 8606 covers contributions to Nondeductible IRAs and is important because it will tell the IRS how much you’ve contributed, on a nondeductible basis, to an IRA. When you go to take disbursements or perhaps convert it to a Roth IRA, the Form 8606 will make sure you don’t pay taxes twice.

It’s crucial.

What if you forgot to file it for past years? Oops. Fortunately, you can still file it for past years but there’s a $50 penalty that can be waived if you have a good reason. You can file a Form 8606 beyond the normal three years (which is how long you have to amend a tax return) and it doesn’t require a Form 1040X (the amended tax return form).

You will need to file one for each year that you made a non-deductible contribution and there isn’t really a list of “good reasons” why you forgot, so good luck with that (it’s a good idea to talk to a tax professional about this).

{ 8 comments, please add your thoughts now! }

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8 Responses to “Form 8606: Non-deductible IRA Contributions”

  1. Texas Wahoo says:

    “I know tax day is less than a week away but this is a last minute reminder for everyone who made a nondeductible contribution to an IRA – don’t for Form 8606.”

    Did I miss something? (Or more likely, did you miss something? 🙂

    • mannymacho says:

      That’s why my coworker always applies for an extension every year – your actionable information can always change in the next few months.

      I guess if anything it’s a good reminder to amend your tax return now and check for anything else you might have missed!

  2. billsnider says:

    I have filed this form before.

    You also have to file it if you withdraw non-deductible IRA contributions.

    I also think (but could be wrong) that you have to file it if you roll a tradional IRA to a ROTh IRA.

    Bill Snider

  3. mikestreb says:

    Think this one got scheduled wrong.

  4. govenar says:

    Did anyone else doing the make-non-deductible-contribution-to-traditional-IRA-and-convert-to-Roth-IRA thing have problems with Form 8606 in tax software? H&R Block At Home Deluxe seemed to have a bug where it claimed it couldn’t e-file this form if the whole IRA was converted (which I think is not true) (I manually changed something on the form and then e-file then seemed to go through fine).

  5. danceguy says:

    I don’t completely get it. Why is 8606 required if YOU convert a traditional IRA into a ROTH IRA? ALL OF THE ROTH IRA money withdrwan later is NOT taxable, so why does form 8606 need this information? If a conversion from traditional to ROTH IRA has to be reported on form 8606, then why isn’t adding to an existing ROTH IRA, or creating a NEW ROTH IRA not simililary handled by form 8606? Since the ROTH IRA withdrawls of both principal and INTEREST from ROTH IRA’s are NOT taxible, why does form 8606 need to know this (all of the money withdrawn from a ROTH is not taxable, so why should it be reported on form 8606 ?? ). This is very confusing to me !!! I thought 8606 form purpose was VERY simple in its purpose until I started reading all the complex rules that the IRS has written for form 8606. HELP! Maybe the alternate purpose of form 8606 is to ensure that you are equitablly paying taxes on withdrawls from IRA’s? (ie that you are fairly withdrawing from all 3 possible types of IRAs fairly (the 3 types being ROTH IRA’s, non-deductable tradtional IRA’s, or deductible IRA’s. Oh yeah, SEP and SIMPLE IRA’s, are the 4th and 5th possible types of IRA’s, just to make things a bit more complicated for everybody.

  6. Anonymous says:

    How to tex Deductible IRA Contribution.
    let me know what kind form need for 1040

  7. Kent Foltz says:

    This is my idea as to why the 8606 is required: Although distibutions from a Roth IRA are not taxable, the IRS could require the taxpayer to provide a record to prove the contributions and earnings were all based on contributions being either Roth contributions, or a conversion from a non-deductible IRA account. The IRS might be preventing the unlikely event that the funds were transferred from a deductible traditional IRA and the conversion escaped taxation.

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