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2012 940 Tax Form

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2012 940 Tax Form

2012 940 tax form Publication 15-T - Additional Material Table of Contents This image is too large to be displayed in the current screen. 2012 940 tax form Please click the link to view the image. 2012 940 tax form Form W-4 (2009) This image is too large to be displayed in the current screen. 2012 940 tax form Please click the link to view the image. 2012 940 tax form Deductions and Adjustments Worksheet Notice to Employees Please click here for the text description of the image. 2012 940 tax form Multi-Media/Back Page Prev  Up  Next   Home   More Online Publications
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Understanding Your CP2000 Notice

The income and/or payment information we have on file doesn’t match the information you reported on your tax return. This could affect your tax return; it may cause an increase or decrease in your tax, or may not change it at all.


What you need to do

  • Read your notice carefully—it explains the information we received and how it affects your tax return.
  • Complete the notice response form whether or not you agree or disagree with the notice, the response form explains what actions to take. (Your specific notice may not have a response form. In that case, the notice will have instructions on what to do).
  • Contact the business or person reporting the information, if it is wrong. Ask them to correct it, and then provide the corrected information to us.

You may want to…


Answers to Common Questions

Why did I receive the notice?

We received information from a third party that doesn’t match the information you reported on your tax return.

Is the notice a bill?

No. It informs you about the information we’ve received and how it affects your tax.

What do I need to do?

Complete the notice response form. (Follow the notice instructions if your notice doesn’t have a response form.)

What do I do if the information is wrong or if I disagree?

The notice response form has instructions on what to do if the new information is wrong. You also may want to contact whoever reported the information and ask them to correct it.

The information is wrong because someone else is using my name and social security number. What can I do?

Call us and let us know. You also can use this link to go to our Identity theft information webpage to find out more about what you can do.

I reported the information but I reported it incorrectly. Can I call you to correct my return?

We can accept your information over the phone for incorrectly reported information as long as the mistake didn't increase or decrease your tax.

Do I need to amend my return?

If the information displayed in the CP2000 notice is correct, you don't need to amend your return unless you have additional income, credits or expenses to report. If you agree with our notice, follow the instructions to sign the response page and return it to us in the envelope provided.

If you have additional income, credits or expenses to report, you may want to complete and submit a Form 1040-X, Amended U.S. Individual Income Tax Return. You can receive help at an IRS Taxpayer Assistance Center.

I want to check a copy of my original return. I don’t have one. How can I get one?

You can get a transcript of your return on our ”Order a Transcript” webpage at irs.gov. You also can get one by completing and sending us a Form 4506-T, Request for Transcript of Tax Return.

I don’t want a transcript of my return. I want a copy. How can I get one?

Did an accountant or some other person prepare your return? You could ask them for a copy.

I can’t get a copy of my return from a tax preparer. How else can I get a copy of it?

You can get a copy of your return by completing and sending us a Form 4506, Request for Copy of Tax Return. We charge a fee for tax return requests.

How can I find an IRS Taxpayer Assistance Center?

We have centers located throughout the country. Our website has directions on how to find the center nearest to you.

Why did it take you so long to contact me about this matter?

Our computer systems match the information you report on your tax return with information reported by employers, banks, businesses, and others. This matching takes several months to complete.

The notice says my taxes will increase. Will I be charged interest on the money I owe?

Yes, interest accrues on your unpaid balance until you pay it in full.

What happens if I can’t pay the full amount I owe?

You can make a payment plan with us when you can’t pay the full amount you owe.

How can I make a payment plan?

Call us at the toll free number on the top right corner of your notice to talk about payment plans or learn more about them at this web page.


Tips for next year

You can avoid future problems by:

  • keeping accurate and full records
  • waiting until you get all of your income statements before filing your tax return
  • checking the records you get from your employer, mortgage company, bank, or other sources of income (W-2s, 1098s, 1099s, etc.) to make sure they're correct
  • including all your income on your tax return
  • following the instructions on how to report income, expenses and deductions
  • filing an amended tax return for any information you receive after you’ve filed your return

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions you may qualify for. In many cases, you can file for free. Learn more about how to file electronically here.

Page Last Reviewed or Updated: 28-Feb-2014

The 2012 940 Tax Form

2012 940 tax form 1. 2012 940 tax form   Traditional IRAs Table of Contents What's New for 2013 What's New for 2014 Introduction Who Can Open a Traditional IRA?What Is Compensation? When Can a Traditional IRA Be Opened? How Can a Traditional IRA Be Opened?Individual Retirement Account Individual Retirement Annuity Individual Retirement Bonds Simplified Employee Pension (SEP) Employer and Employee Association Trust Accounts Required Disclosures How Much Can Be Contributed?Limit. 2012 940 tax form When repayment contributions can be made. 2012 940 tax form No deduction. 2012 940 tax form Reserve component. 2012 940 tax form Figuring your IRA deduction. 2012 940 tax form Reporting the repayment. 2012 940 tax form Example. 2012 940 tax form General Limit Kay Bailey Hutchison Spousal IRA Limit Filing Status Less Than Maximum Contributions More Than Maximum Contributions When Can Contributions Be Made? How Much Can You Deduct?Kay Bailey Hutchison Spousal IRA. 2012 940 tax form Are You Covered by an Employer Plan? Limit if Covered by Employer Plan Reporting Deductible Contributions Nondeductible Contributions Examples — Worksheet for Reduced IRA Deduction for 2013 What if You Inherit an IRA?Treating it as your own. 2012 940 tax form Can You Move Retirement Plan Assets?Transfers to Roth IRAs from other retirement plans. 2012 940 tax form Trustee-to-Trustee Transfer Rollovers Transfers Incident To Divorce Converting From Any Traditional IRA Into a Roth IRA Recharacterizations When Can You Withdraw or Use Assets?Contributions Returned Before Due Date of Return When Must You Withdraw Assets? (Required Minimum Distributions)IRA Owners IRA Beneficiaries Which Table Do You Use To Determine Your Required Minimum Distribution? What Age(s) Do You Use With the Table(s)? Miscellaneous Rules for Required Minimum Distributions Are Distributions Taxable?January 2013 QCDs treated as made in 2012. 2012 940 tax form 2013 Reporting. 2012 940 tax form Additional reporting requirements if you made the election to treat a January 2013 QCD as made in 2012. 2012 940 tax form One-time transfer. 2012 940 tax form Testing period rules apply. 2012 940 tax form More information. 2012 940 tax form Distributions Fully or Partly Taxable Figuring the Nontaxable and Taxable Amounts Recognizing Losses on Traditional IRA Investments Other Special IRA Distribution Situations Reporting and Withholding Requirements for Taxable Amounts What Acts Result in Penalties or Additional Taxes?Prohibited Transactions Investment in Collectibles Excess Contributions Early Distributions Excess Accumulations (Insufficient Distributions) Reporting Additional Taxes What's New for 2013 Traditional IRA contribution and deduction limit. 2012 940 tax form  The contribution limit to your traditional IRA for 2013 will be increased to the smaller of the following amounts: $5,500, or Your taxable compensation for the year. 2012 940 tax form If you were age 50 or older before 2014, the most that can be contributed to your traditional IRA for 2013 will be the smaller of the following amounts: $6,500, or Your taxable compensation for the year. 2012 940 tax form For more information, see How Much Can Be Contributed? in this chapter. 2012 940 tax form Modified AGI limit for traditional IRA contributions increased. 2012 940 tax form  For 2013, if you were covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $95,000 but less than $115,000 for a married couple filing a joint return or a qualifying widow(er), More than $59,000 but less than $69,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. 2012 940 tax form If you either lived with your spouse or file a joint return, and your spouse was covered by a retirement plan at work, but you were not, your deduction is phased out if your modified AGI is more than $178,000 but less than $188,000. 2012 940 tax form If your modified AGI is $188,000 or more, you cannot take a deduction for contributions to a traditional IRA. 2012 940 tax form See How Much Can You Deduct? in this chapter. 2012 940 tax form Net Investment Income Tax. 2012 940 tax form  For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan (for example, 401(a), 403(a), 403(b), 457(b) plans, and IRAs). 2012 940 tax form However, these distributions are taken into account when determining the modified adjusted gross income threshold. 2012 940 tax form Distributions from a nonqualified retirement plan are included in net investment income. 2012 940 tax form See Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions for more information. 2012 940 tax form What's New for 2014 Modified AGI limit for traditional IRA contributions increased. 2012 940 tax form  For 2014, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $96,000 but less than $116,000 for a married couple filing a joint return or a qualifying widow(er), More than $60,000 but less than $70,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. 2012 940 tax form If you either live with your spouse or file a joint return, and your spouse is covered by a retirement plan at work, but you are not, your deduction is phased out if your modified AGI is more than $181,000 but less than $191,000. 2012 940 tax form If your modified AGI is $191,000 or more, you cannot take a deduction for contributions to a traditional IRA. 2012 940 tax form Introduction This chapter discusses the original IRA. 2012 940 tax form In this publication the original IRA (sometimes called an ordinary or regular IRA) is referred to as a “traditional IRA. 2012 940 tax form ” A traditional IRA is any IRA that is not a Roth IRA or a SIMPLE IRA. 2012 940 tax form The following are two advantages of a traditional IRA: You may be able to deduct some or all of your contributions to it, depending on your circumstances. 2012 940 tax form Generally, amounts in your IRA, including earnings and gains, are not taxed until they are distributed. 2012 940 tax form Who Can Open a Traditional IRA? You can open and make contributions to a traditional IRA if: You (or, if you file a joint return, your spouse) received taxable compensation during the year, and You were not age 70½ by the end of the year. 2012 940 tax form You can have a traditional IRA whether or not you are covered by any other retirement plan. 2012 940 tax form However, you may not be able to deduct all of your contributions if you or your spouse is covered by an employer retirement plan. 2012 940 tax form See How Much Can You Deduct , later. 2012 940 tax form Both spouses have compensation. 2012 940 tax form   If both you and your spouse have compensation and are under age 70½, each of you can open an IRA. 2012 940 tax form You cannot both participate in the same IRA. 2012 940 tax form If you file a joint return, only one of you needs to have compensation. 2012 940 tax form What Is Compensation? Generally, compensation is what you earn from working. 2012 940 tax form For a summary of what compensation does and does not include, see Table 1-1. 2012 940 tax form Compensation includes all of the items discussed next (even if you have more than one type). 2012 940 tax form Wages, salaries, etc. 2012 940 tax form   Wages, salaries, tips, professional fees, bonuses, and other amounts you receive for providing personal services are compensation. 2012 940 tax form The IRS treats as compensation any amount properly shown in box 1 (Wages, tips, other compensation) of Form W-2, Wage and Tax Statement, provided that amount is reduced by any amount properly shown in box 11 (Nonqualified plans). 2012 940 tax form Scholarship and fellowship payments are compensation for IRA purposes only if shown in box 1 of Form W-2. 2012 940 tax form Commissions. 2012 940 tax form   An amount you receive that is a percentage of profits or sales price is compensation. 2012 940 tax form Self-employment income. 2012 940 tax form   If you are self-employed (a sole proprietor or a partner), compensation is the net earnings from your trade or business (provided your personal services are a material income-producing factor) reduced by the total of: The deduction for contributions made on your behalf to retirement plans, and The deduction allowed for the deductible part of your self-employment taxes. 2012 940 tax form   Compensation includes earnings from self-employment even if they are not subject to self-employment tax because of your religious beliefs. 2012 940 tax form Self-employment loss. 2012 940 tax form   If you have a net loss from self-employment, do not subtract the loss from your salaries or wages when figuring your total compensation. 2012 940 tax form Alimony and separate maintenance. 2012 940 tax form   For IRA purposes, compensation includes any taxable alimony and separate maintenance payments you receive under a decree of divorce or separate maintenance. 2012 940 tax form Nontaxable combat pay. 2012 940 tax form   If you were a member of the U. 2012 940 tax form S. 2012 940 tax form Armed Forces, compensation includes any nontaxable combat pay you received. 2012 940 tax form This amount should be reported in box 12 of your 2013 Form W-2 with code Q. 2012 940 tax form Table 1-1. 2012 940 tax form Compensation for Purposes of an IRA Includes . 2012 940 tax form . 2012 940 tax form . 2012 940 tax form Does not include . 2012 940 tax form . 2012 940 tax form . 2012 940 tax form   earnings and profits from property. 2012 940 tax form wages, salaries, etc. 2012 940 tax form     interest and dividend income. 2012 940 tax form commissions. 2012 940 tax form     pension or annuity income. 2012 940 tax form self-employment income. 2012 940 tax form     deferred compensation. 2012 940 tax form alimony and separate maintenance. 2012 940 tax form     income from certain  partnerships. 2012 940 tax form nontaxable combat pay. 2012 940 tax form     any amounts you exclude from income. 2012 940 tax form     What Is Not Compensation? Compensation does not include any of the following items. 2012 940 tax form Earnings and profits from property, such as rental income, interest income, and dividend income. 2012 940 tax form Pension or annuity income. 2012 940 tax form Deferred compensation received (compensation payments postponed from a past year). 2012 940 tax form Income from a partnership for which you do not provide services that are a material income-producing factor. 2012 940 tax form Conservation Reserve Program (CRP) payments reported on Schedule SE (Form 1040), line 1b. 2012 940 tax form Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs. 2012 940 tax form When Can a Traditional IRA Be Opened? You can open a traditional IRA at any time. 2012 940 tax form However, the time for making contributions for any year is limited. 2012 940 tax form See When Can Contributions Be Made , later. 2012 940 tax form How Can a Traditional IRA Be Opened? You can open different kinds of IRAs with a variety of organizations. 2012 940 tax form You can open an IRA at a bank or other financial institution or with a mutual fund or life insurance company. 2012 940 tax form You can also open an IRA through your stockbroker. 2012 940 tax form Any IRA must meet Internal Revenue Code requirements. 2012 940 tax form The requirements for the various arrangements are discussed below. 2012 940 tax form Kinds of traditional IRAs. 2012 940 tax form   Your traditional IRA can be an individual retirement account or annuity. 2012 940 tax form It can be part of either a simplified employee pension (SEP) or an employer or employee association trust account. 2012 940 tax form Individual Retirement Account An individual retirement account is a trust or custodial account set up in the United States for the exclusive benefit of you or your beneficiaries. 2012 940 tax form The account is created by a written document. 2012 940 tax form The document must show that the account meets all of the following requirements. 2012 940 tax form The trustee or custodian must be a bank, a federally insured credit union, a savings and loan association, or an entity approved by the IRS to act as trustee or custodian. 2012 940 tax form The trustee or custodian generally cannot accept contributions of more than the deductible amount for the year. 2012 940 tax form However, rollover contributions and employer contributions to a simplified employee pension (SEP) can be more than this amount. 2012 940 tax form Contributions, except for rollover contributions, must be in cash. 2012 940 tax form See Rollovers , later. 2012 940 tax form You must have a nonforfeitable right to the amount at all times. 2012 940 tax form Money in your account cannot be used to buy a life insurance policy. 2012 940 tax form Assets in your account cannot be combined with other property, except in a common trust fund or common investment fund. 2012 940 tax form You must start receiving distributions by April 1 of the year following the year in which you reach age 70½. 2012 940 tax form See When Must You Withdraw Assets? (Required Minimum Distributions) , later. 2012 940 tax form Individual Retirement Annuity You can open an individual retirement annuity by purchasing an annuity contract or an endowment contract from a life insurance company. 2012 940 tax form An individual retirement annuity must be issued in your name as the owner, and either you or your beneficiaries who survive you are the only ones who can receive the benefits or payments. 2012 940 tax form An individual retirement annuity must meet all the following requirements. 2012 940 tax form Your entire interest in the contract must be nonforfeitable. 2012 940 tax form The contract must provide that you cannot transfer any portion of it to any person other than the issuer. 2012 940 tax form There must be flexible premiums so that if your compensation changes, your payment can also change. 2012 940 tax form This provision applies to contracts issued after November 6, 1978. 2012 940 tax form The contract must provide that contributions cannot be more than the deductible amount for an IRA for the year, and that you must use any refunded premiums to pay for future premiums or to buy more benefits before the end of the calendar year after the year in which you receive the refund. 2012 940 tax form Distributions must begin by April 1 of the year following the year in which you reach age 70½. 2012 940 tax form See When Must You Withdraw Assets? (Required Minimum Distributions) , later. 2012 940 tax form Individual Retirement Bonds The sale of individual retirement bonds issued by the federal government was suspended after April 30, 1982. 2012 940 tax form The bonds have the following features. 2012 940 tax form They stop earning interest when you reach age 70½. 2012 940 tax form If you die, interest will stop 5 years after your death, or on the date you would have reached age 70½, whichever is earlier. 2012 940 tax form You cannot transfer the bonds. 2012 940 tax form If you cash (redeem) the bonds before the year in which you reach age 59½, you may be subject to a 10% additional tax. 2012 940 tax form See Age 59½ Rule under Early Distributions, later. 2012 940 tax form You can roll over redemption proceeds into IRAs. 2012 940 tax form Simplified Employee Pension (SEP) A simplified employee pension (SEP) is a written arrangement that allows your employer to make deductible contributions to a traditional IRA (a SEP IRA) set up for you to receive such contributions. 2012 940 tax form Generally, distributions from SEP IRAs are subject to the withdrawal and tax rules that apply to traditional IRAs. 2012 940 tax form See Publication 560 for more information about SEPs. 2012 940 tax form Employer and Employee Association Trust Accounts Your employer or your labor union or other employee association can set up a trust to provide individual retirement accounts for employees or members. 2012 940 tax form The requirements for individual retirement accounts apply to these traditional IRAs. 2012 940 tax form Required Disclosures The trustee or issuer (sometimes called the sponsor) of your traditional IRA generally must give you a disclosure statement at least 7 days before you open your IRA. 2012 940 tax form However, the sponsor does not have to give you the statement until the date you open (or purchase, if earlier) your IRA, provided you are given at least 7 days from that date to revoke the IRA. 2012 940 tax form The disclosure statement must explain certain items in plain language. 2012 940 tax form For example, the statement should explain when and how you can revoke the IRA, and include the name, address, and telephone number of the person to receive the notice of cancellation. 2012 940 tax form This explanation must appear at the beginning of the disclosure statement. 2012 940 tax form If you revoke your IRA within the revocation period, the sponsor must return to you the entire amount you paid. 2012 940 tax form The sponsor must report on the appropriate IRS forms both your contribution to the IRA (unless it was made by a trustee-to-trustee transfer) and the amount returned to you. 2012 940 tax form These requirements apply to all sponsors. 2012 940 tax form How Much Can Be Contributed? There are limits and other rules that affect the amount that can be contributed to a traditional IRA. 2012 940 tax form These limits and rules are explained below. 2012 940 tax form Community property laws. 2012 940 tax form   Except as discussed later under Kay Bailey Hutchison Spousal IRA Limit , each spouse figures his or her limit separately, using his or her own compensation. 2012 940 tax form This is the rule even in states with community property laws. 2012 940 tax form Brokers' commissions. 2012 940 tax form   Brokers' commissions paid in connection with your traditional IRA are subject to the contribution limit. 2012 940 tax form For information about whether you can deduct brokers' commissions, see Brokers' commissions , later, under How Much Can You Deduct. 2012 940 tax form Trustees' fees. 2012 940 tax form   Trustees' administrative fees are not subject to the contribution limit. 2012 940 tax form For information about whether you can deduct trustees' fees, see Trustees' fees , later, under How Much Can You Deduct. 2012 940 tax form Qualified reservist repayments. 2012 940 tax form   If you were a member of a reserve component and you were ordered or called to active duty after September 11, 2001, you may be able to contribute (repay) to an IRA amounts equal to any qualified reservist distributions (defined later under Early Distributions) you received. 2012 940 tax form You can make these repayment contributions even if they would cause your total contributions to the IRA to be more than the general limit on contributions. 2012 940 tax form To be eligible to make these repayment contributions, you must have received a qualified reservist distribution from an IRA or from a section 401(k) or 403(b) plan or a similar arrangement. 2012 940 tax form Limit. 2012 940 tax form   Your qualified reservist repayments cannot be more than your qualified reservist distributions, explained under Early Distributions , later. 2012 940 tax form When repayment contributions can be made. 2012 940 tax form   You cannot make these repayment contributions later than the date that is 2 years after your active duty period ends. 2012 940 tax form No deduction. 2012 940 tax form   You cannot deduct qualified reservist repayments. 2012 940 tax form Reserve component. 2012 940 tax form   The term “reserve component” means the: Army National Guard of the United States, Army Reserve, Naval Reserve, Marine Corps Reserve, Air National Guard of the United States, Air Force Reserve, Coast Guard Reserve, or Reserve Corps of the Public Health Service. 2012 940 tax form Figuring your IRA deduction. 2012 940 tax form   The repayment of qualified reservist distributions does not affect the amount you can deduct as an IRA contribution. 2012 940 tax form Reporting the repayment. 2012 940 tax form   If you repay a qualified reservist distribution, include the amount of the repayment with nondeductible contributions on line 1 of Form 8606. 2012 940 tax form Example. 2012 940 tax form   In 2013, your IRA contribution limit is $5,500. 2012 940 tax form However, because of your filing status and AGI, the limit on the amount you can deduct is $3,500. 2012 940 tax form You can make a nondeductible contribution of $2,000 ($5,500 - $3,500). 2012 940 tax form In an earlier year you received a $3,000 qualified reservist distribution, which you would like to repay this year. 2012 940 tax form   For 2013, you can contribute a total of $8,500 to your IRA. 2012 940 tax form This is made up of the maximum deductible contribution of $3,500; a nondeductible contribution of $2,000; and a $3,000 qualified reservist repayment. 2012 940 tax form You contribute the maximum allowable for the year. 2012 940 tax form Since you are making a nondeductible contribution ($2,000) and a qualified reservist repayment ($3,000), you must file Form 8606 with your return and include $5,000 ($2,000 + $3,000) on line 1 of Form 8606. 2012 940 tax form The qualified reservist repayment is not deductible. 2012 940 tax form Contributions on your behalf to a traditional IRA reduce your limit for contributions to a Roth IRA. 2012 940 tax form See chapter 2 for information about Roth IRAs. 2012 940 tax form General Limit For 2013, the most that can be contributed to your traditional IRA generally is the smaller of the following amounts: $5,500 ($6,500 if you are age 50 or older), or Your taxable compensation (defined earlier) for the year. 2012 940 tax form Note. 2012 940 tax form This limit is reduced by any contributions to a section 501(c)(18) plan (generally, a pension plan created before June 25, 1959, that is funded entirely by employee contributions). 2012 940 tax form This is the most that can be contributed regardless of whether the contributions are to one or more traditional IRAs or whether all or part of the contributions are nondeductible. 2012 940 tax form (See Nondeductible Contributions , later. 2012 940 tax form ) Qualified reservist repayments do not affect this limit. 2012 940 tax form Examples. 2012 940 tax form George, who is 34 years old and single, earns $24,000 in 2013. 2012 940 tax form His IRA contributions for 2013 are limited to $5,500. 2012 940 tax form Danny, an unmarried college student working part time, earns $3,500 in 2013. 2012 940 tax form His IRA contributions for 2013 are limited to $3,500, the amount of his compensation. 2012 940 tax form More than one IRA. 2012 940 tax form   If you have more than one IRA, the limit applies to the total contributions made on your behalf to all your traditional IRAs for the year. 2012 940 tax form Annuity or endowment contracts. 2012 940 tax form   If you invest in an annuity or endowment contract under an individual retirement annuity, no more than $5,500 ($6,500 if you are age 50 or older) can be contributed toward its cost for the tax year, including the cost of life insurance coverage. 2012 940 tax form If more than this amount is contributed, the annuity or endowment contract is disqualified. 2012 940 tax form Kay Bailey Hutchison Spousal IRA Limit For 2013, if you file a joint return and your taxable compensation is less than that of your spouse, the most that can be contributed for the year to your IRA is the smaller of the following two amounts: $5,500 ($6,500 if you are age 50 or older), or The total compensation includible in the gross income of both you and your spouse for the year, reduced by the following two amounts. 2012 940 tax form Your spouse's IRA contribution for the year to a traditional IRA. 2012 940 tax form Any contributions for the year to a Roth IRA on behalf of your spouse. 2012 940 tax form This means that the total combined contributions that can be made for the year to your IRA and your spouse's IRA can be as much as $11,000 ($12,000 if only one of you is age 50 or older or $13,000 if both of you are age 50 or older). 2012 940 tax form Note. 2012 940 tax form This traditional IRA limit is reduced by any contributions to a section 501(c)(18) plan (generally, a pension plan created before June 25, 1959, that is funded entirely by employee contributions). 2012 940 tax form Example. 2012 940 tax form Kristin, a full-time student with no taxable compensation, marries Carl during the year. 2012 940 tax form Neither of them was age 50 by the end of 2013. 2012 940 tax form For the year, Carl has taxable compensation of $30,000. 2012 940 tax form He plans to contribute (and deduct) $5,500 to a traditional IRA. 2012 940 tax form If he and Kristin file a joint return, each can contribute $5,500 to a traditional IRA. 2012 940 tax form This is because Kristin, who has no compensation, can add Carl's compensation, reduced by the amount of his IRA contribution ($30,000 − $5,500 = $24,500), to her own compensation (-0-) to figure her maximum contribution to a traditional IRA. 2012 940 tax form In her case, $5,500 is her contribution limit, because $5,500 is less than $24,500 (her compensation for purposes of figuring her contribution limit). 2012 940 tax form Filing Status Generally, except as discussed earlier under Kay Bailey Hutchison Spousal IRA Limit , your filing status has no effect on the amount of allowable contributions to your traditional IRA. 2012 940 tax form However, if during the year either you or your spouse was covered by a retirement plan at work, your deduction may be reduced or eliminated, depending on your filing status and income. 2012 940 tax form See How Much Can You Deduct , later. 2012 940 tax form Example. 2012 940 tax form Tom and Darcy are married and both are 53. 2012 940 tax form They both work and each has a traditional IRA. 2012 940 tax form Tom earned $3,800 and Darcy earned $48,000 in 2013. 2012 940 tax form Because of the Kay Bailey Hutchison Spousal IRA limit rule, even though Tom earned less than $6,500, they can contribute up to $6,500 to his IRA for 2013 if they file a joint return. 2012 940 tax form They can contribute up to $6,500 to Darcy's IRA. 2012 940 tax form If they file separate returns, the amount that can be contributed to Tom's IRA is limited by his earned income, $3,800. 2012 940 tax form Less Than Maximum Contributions If contributions to your traditional IRA for a year were less than the limit, you cannot contribute more after the due date of your return for that year to make up the difference. 2012 940 tax form Example. 2012 940 tax form Rafael, who is 40, earns $30,000 in 2013. 2012 940 tax form Although he can contribute up to $5,500 for 2013, he contributes only $3,000. 2012 940 tax form After April 15, 2014, Rafael cannot make up the difference between his actual contributions for 2013 ($3,000) and his 2013 limit ($5,500). 2012 940 tax form He cannot contribute $2,500 more than the limit for any later year. 2012 940 tax form More Than Maximum Contributions If contributions to your IRA for a year were more than the limit, you can apply the excess contribution in one year to a later year if the contributions for that later year are less than the maximum allowed for that year. 2012 940 tax form However, a penalty or additional tax may apply. 2012 940 tax form See Excess Contributions , later, under What Acts Result in Penalties or Additional Taxes. 2012 940 tax form When Can Contributions Be Made? As soon as you open your traditional IRA, contributions can be made to it through your chosen sponsor (trustee or other administrator). 2012 940 tax form Contributions must be in the form of money (cash, check, or money order). 2012 940 tax form Property cannot be contributed. 2012 940 tax form Although property cannot be contributed, your IRA may invest in certain property. 2012 940 tax form For example, your IRA may purchase shares of stock. 2012 940 tax form For other restrictions on the use of funds in your IRA, see Prohibited Transactions , later in this chapter. 2012 940 tax form You may be able to transfer or roll over certain property from one retirement plan to another. 2012 940 tax form See the discussion of rollovers and other transfers later in this chapter under Can You Move Retirement Plan Assets . 2012 940 tax form You can make a contribution to your IRA by having your income tax refund (or a portion of your refund), if any, paid directly to your traditional IRA, Roth IRA, or SEP IRA. 2012 940 tax form For details, see the instructions for your income tax return or Form 8888, Allocation of Refund (Including Savings Bond Purchases). 2012 940 tax form Contributions can be made to your traditional IRA for each year that you receive compensation and have not reached age 70½. 2012 940 tax form For any year in which you do not work, contributions cannot be made to your IRA unless you receive alimony, nontaxable combat pay, military differential pay, or file a joint return with a spouse who has compensation. 2012 940 tax form See Who Can Open a Traditional IRA , earlier. 2012 940 tax form Even if contributions cannot be made for the current year, the amounts contributed for years in which you did qualify can remain in your IRA. 2012 940 tax form Contributions can resume for any years that you qualify. 2012 940 tax form Contributions must be made by due date. 2012 940 tax form   Contributions can be made to your traditional IRA for a year at any time during the year or by the due date for filing your return for that year, not including extensions. 2012 940 tax form For most people, this means that contributions for 2013 must be made by April 15, 2014, and contributions for 2014 must be made by April 15, 2015. 2012 940 tax form Age 70½ rule. 2012 940 tax form   Contributions cannot be made to your traditional IRA for the year in which you reach age 70½ or for any later year. 2012 940 tax form   You attain age 70½ on the date that is 6 calendar months after the 70th anniversary of your birth. 2012 940 tax form If you were born on or before June 30, 1943, you cannot contribute for 2013 or any later year. 2012 940 tax form Designating year for which contribution is made. 2012 940 tax form   If an amount is contributed to your traditional IRA between January 1 and April 15, you should tell the sponsor which year (the current year or the previous year) the contribution is for. 2012 940 tax form If you do not tell the sponsor which year it is for, the sponsor can assume, and report to the IRS, that the contribution is for the current year (the year the sponsor received it). 2012 940 tax form Filing before a contribution is made. 2012 940 tax form    You can file your return claiming a traditional IRA contribution before the contribution is actually made. 2012 940 tax form Generally, the contribution must be made by the due date of your return, not including extensions. 2012 940 tax form Contributions not required. 2012 940 tax form   You do not have to contribute to your traditional IRA for every tax year, even if you can. 2012 940 tax form How Much Can You Deduct? Generally, you can deduct the lesser of: The contributions to your traditional IRA for the year, or The general limit (or the Kay Bailey Hutchison Spousal IRA limit, if applicable) explained earlier under How Much Can Be Contributed . 2012 940 tax form However, if you or your spouse was covered by an employer retirement plan, you may not be able to deduct this amount. 2012 940 tax form See Limit if Covered by Employer Plan , later. 2012 940 tax form You may be able to claim a credit for contributions to your traditional IRA. 2012 940 tax form For more information, see chapter 4. 2012 940 tax form Trustees' fees. 2012 940 tax form   Trustees' administrative fees that are billed separately and paid in connection with your traditional IRA are not deductible as IRA contributions. 2012 940 tax form However, they may be deductible as a miscellaneous itemized deduction on Schedule A (Form 1040). 2012 940 tax form For information about miscellaneous itemized deductions, see Publication 529, Miscellaneous Deductions. 2012 940 tax form Brokers' commissions. 2012 940 tax form   These commissions are part of your IRA contribution and, as such, are deductible subject to the limits. 2012 940 tax form Full deduction. 2012 940 tax form   If neither you nor your spouse was covered for any part of the year by an employer retirement plan, you can take a deduction for total contributions to one or more of your traditional IRAs of up to the lesser of: $5,500 ($6,500 if you are age 50 or older), or 100% of your compensation. 2012 940 tax form   This limit is reduced by any contributions made to a 501(c)(18) plan on your behalf. 2012 940 tax form Kay Bailey Hutchison Spousal IRA. 2012 940 tax form   In the case of a married couple with unequal compensation who file a joint return, the deduction for contributions to the traditional IRA of the spouse with less compensation is limited to the lesser of: $5,500 ($6,500 if the spouse with the lower compensation is age 50 or older), or The total compensation includible in the gross income of both spouses for the year reduced by the following three amounts. 2012 940 tax form The IRA deduction for the year of the spouse with the greater compensation. 2012 940 tax form Any designated nondeductible contribution for the year made on behalf of the spouse with the greater compensation. 2012 940 tax form Any contributions for the year to a Roth IRA on behalf of the spouse with the greater compensation. 2012 940 tax form   This limit is reduced by any contributions to a section 501(c)(18) plan on behalf of the spouse with the lesser compensation. 2012 940 tax form Note. 2012 940 tax form If you were divorced or legally separated (and did not remarry) before the end of the year, you cannot deduct any contributions to your spouse's IRA. 2012 940 tax form After a divorce or legal separation, you can deduct only the contributions to your own IRA. 2012 940 tax form Your deductions are subject to the rules for single individuals. 2012 940 tax form Covered by an employer retirement plan. 2012 940 tax form   If you or your spouse was covered by an employer retirement plan at any time during the year for which contributions were made, your deduction may be further limited. 2012 940 tax form This is discussed later under Limit if Covered by Employer Plan . 2012 940 tax form Limits on the amount you can deduct do not affect the amount that can be contributed. 2012 940 tax form Are You Covered by an Employer Plan? The Form W-2 you receive from your employer has a box used to indicate whether you were covered for the year. 2012 940 tax form The “Retirement Plan” box should be checked if you were covered. 2012 940 tax form Reservists and volunteer firefighters should also see Situations in Which You Are Not Covered , later. 2012 940 tax form If you are not certain whether you were covered by your employer's retirement plan, you should ask your employer. 2012 940 tax form Federal judges. 2012 940 tax form   For purposes of the IRA deduction, federal judges are covered by an employer plan. 2012 940 tax form For Which Year(s) Are You Covered? Special rules apply to determine the tax years for which you are covered by an employer plan. 2012 940 tax form These rules differ depending on whether the plan is a defined contribution plan or a defined benefit plan. 2012 940 tax form Tax year. 2012 940 tax form   Your tax year is the annual accounting period you use to keep records and report income and expenses on your income tax return. 2012 940 tax form For almost all people, the tax year is the calendar year. 2012 940 tax form Defined contribution plan. 2012 940 tax form   Generally, you are covered by a defined contribution plan for a tax year if amounts are contributed or allocated to your account for the plan year that ends with or within that tax year. 2012 940 tax form However, also see Situations in Which You Are Not Covered , later. 2012 940 tax form   A defined contribution plan is a plan that provides for a separate account for each person covered by the plan. 2012 940 tax form In a defined contribution plan, the amount to be contributed to each participant's account is spelled out in the plan. 2012 940 tax form The level of benefits actually provided to a participant depends on the total amount contributed to that participant's account and any earnings and losses on those contributions. 2012 940 tax form Types of defined contribution plans include profit-sharing plans, stock bonus plans, and money purchase pension plans. 2012 940 tax form Example. 2012 940 tax form Company A has a money purchase pension plan. 2012 940 tax form Its plan year is from July 1 to June 30. 2012 940 tax form The plan provides that contributions must be allocated as of June 30. 2012 940 tax form Bob, an employee, leaves Company A on December 31, 2012. 2012 940 tax form The contribution for the plan year ending on June 30, 2013, is made February 15, 2014. 2012 940 tax form Because an amount is contributed to Bob's account for the plan year, Bob is covered by the plan for his 2013 tax year. 2012 940 tax form   A special rule applies to certain plans in which it is not possible to determine if an amount will be contributed to your account for a given plan year. 2012 940 tax form If, for a plan year, no amounts have been allocated to your account that are attributable to employer contributions, employee contributions, or forfeitures, by the last day of the plan year, and contributions are discretionary for the plan year, you are not covered for the tax year in which the plan year ends. 2012 940 tax form If, after the plan year ends, the employer makes a contribution for that plan year, you are covered for the tax year in which the contribution is made. 2012 940 tax form Example. 2012 940 tax form Mickey was covered by a profit-sharing plan and left the company on December 31, 2012. 2012 940 tax form The plan year runs from July 1 to June 30. 2012 940 tax form Under the terms of the plan, employer contributions do not have to be made, but if they are made, they are contributed to the plan before the due date for filing the company's tax return. 2012 940 tax form Such contributions are allocated as of the last day of the plan year, and allocations are made to the accounts of individuals who have any service during the plan year. 2012 940 tax form As of June 30, 2013, no contributions were made that were allocated to the June 30, 2013, plan year, and no forfeitures had been allocated within the plan year. 2012 940 tax form In addition, as of that date, the company was not obligated to make a contribution for such plan year and it was impossible to determine whether or not a contribution would be made for the plan year. 2012 940 tax form On December 31, 2013, the company decided to contribute to the plan for the plan year ending June 30, 2013. 2012 940 tax form That contribution was made on February 15, 2014. 2012 940 tax form Mickey is an active participant in the plan for his 2014 tax year but not for his 2013 tax year. 2012 940 tax form No vested interest. 2012 940 tax form   If an amount is allocated to your account for a plan year, you are covered by that plan even if you have no vested interest in (legal right to) the account. 2012 940 tax form Defined benefit plan. 2012 940 tax form   If you are eligible to participate in your employer's defined benefit plan for the plan year that ends within your tax year, you are covered by the plan. 2012 940 tax form This rule applies even if you: Declined to participate in the plan, Did not make a required contribution, or Did not perform the minimum service required to accrue a benefit for the year. 2012 940 tax form   A defined benefit plan is any plan that is not a defined contribution plan. 2012 940 tax form In a defined benefit plan, the level of benefits to be provided to each participant is spelled out in the plan. 2012 940 tax form The plan administrator figures the amount needed to provide those benefits and those amounts are contributed to the plan. 2012 940 tax form Defined benefit plans include pension plans and annuity plans. 2012 940 tax form Example. 2012 940 tax form Nick, an employee of Company B, is eligible to participate in Company B's defined benefit plan, which has a July 1 to June 30 plan year. 2012 940 tax form Nick leaves Company B on December 31, 2012. 2012 940 tax form Because Nick is eligible to participate in the plan for its year ending June 30, 2013, he is covered by the plan for his 2013 tax year. 2012 940 tax form No vested interest. 2012 940 tax form   If you accrue a benefit for a plan year, you are covered by that plan even if you have no vested interest in (legal right to) the accrual. 2012 940 tax form Situations in Which You Are Not Covered Unless you are covered by another employer plan, you are not covered by an employer plan if you are in one of the situations described below. 2012 940 tax form Social security or railroad retirement. 2012 940 tax form   Coverage under social security or railroad retirement is not coverage under an employer retirement plan. 2012 940 tax form Benefits from previous employer's plan. 2012 940 tax form   If you receive retirement benefits from a previous employer's plan, you are not covered by that plan. 2012 940 tax form Reservists. 2012 940 tax form   If the only reason you participate in a plan is because you are a member of a reserve unit of the Armed Forces, you may not be covered by the plan. 2012 940 tax form You are not covered by the plan if both of the following conditions are met. 2012 940 tax form The plan you participate in is established for its employees by: The United States, A state or political subdivision of a state, or An instrumentality of either (a) or (b) above. 2012 940 tax form You did not serve more than 90 days on active duty during the year (not counting duty for training). 2012 940 tax form Volunteer firefighters. 2012 940 tax form   If the only reason you participate in a plan is because you are a volunteer firefighter, you may not be covered by the plan. 2012 940 tax form You are not covered by the plan if both of the following conditions are met. 2012 940 tax form The plan you participate in is established for its employees by: The United States, A state or political subdivision of a state, or An instrumentality of either (a) or (b) above. 2012 940 tax form Your accrued retirement benefits at the beginning of the year will not provide more than $1,800 per year at retirement. 2012 940 tax form Limit if Covered by Employer Plan As discussed earlier, the deduction you can take for contributions made to your traditional IRA depends on whether you or your spouse was covered for any part of the year by an employer retirement plan. 2012 940 tax form Your deduction is also affected by how much income you had and by your filing status. 2012 940 tax form Your deduction may also be affected by social security benefits you received. 2012 940 tax form Reduced or no deduction. 2012 940 tax form   If either you or your spouse was covered by an employer retirement plan, you may be entitled to only a partial (reduced) deduction or no deduction at all, depending on your income and your filing status. 2012 940 tax form   Your deduction begins to decrease (phase out) when your income rises above a certain amount and is eliminated altogether when it reaches a higher amount. 2012 940 tax form These amounts vary depending on your filing status. 2012 940 tax form   To determine if your deduction is subject to the phaseout, you must determine your modified adjusted gross income (AGI) and your filing status, as explained later under Deduction Phaseout . 2012 940 tax form Once you have determined your modified AGI and your filing status, you can use Table 1-2 or Table 1-3 to determine if the phaseout applies. 2012 940 tax form Social Security Recipients Instead of using Table 1-2 or Table 1-3 and Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, later, complete the worksheets in Appendix B of this publication if, for the year, all of the following apply. 2012 940 tax form You received social security benefits. 2012 940 tax form You received taxable compensation. 2012 940 tax form Contributions were made to your traditional IRA. 2012 940 tax form You or your spouse was covered by an employer retirement plan. 2012 940 tax form Use the worksheets in Appendix B to figure your IRA deduction, your nondeductible contribution, and the taxable portion, if any, of your social security benefits. 2012 940 tax form Appendix B includes an example with filled-in worksheets to assist you. 2012 940 tax form Table 1-2. 2012 940 tax form Effect of Modified AGI1 on Deduction if You Are Covered by a Retirement Plan at Work If you are covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction. 2012 940 tax form IF your filing status is . 2012 940 tax form . 2012 940 tax form . 2012 940 tax form AND your modified adjusted gross income (modified AGI) is . 2012 940 tax form . 2012 940 tax form . 2012 940 tax form THEN you can take . 2012 940 tax form . 2012 940 tax form . 2012 940 tax form single or head of household $59,000 or less a full deduction. 2012 940 tax form more than $59,000 but less than $69,000 a partial deduction. 2012 940 tax form $69,000 or more no deduction. 2012 940 tax form married filing jointly or  qualifying widow(er) $95,000 or less a full deduction. 2012 940 tax form more than $95,000 but less than $115,000 a partial deduction. 2012 940 tax form $115,000 or more no deduction. 2012 940 tax form married filing separately2 less than $10,000 a partial deduction. 2012 940 tax form $10,000 or more no deduction. 2012 940 tax form 1 Modified AGI (adjusted gross income). 2012 940 tax form See Modified adjusted gross income (AGI) , later. 2012 940 tax form  2 If you did not live with your spouse at any time during the year, your filing status is considered Single for this purpose (therefore, your IRA deduction is determined under the “Single” filing status). 2012 940 tax form Table 1-3. 2012 940 tax form Effect of Modified AGI1 on Deduction if You Are NOT Covered by a Retirement Plan at Work If you are not covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction. 2012 940 tax form IF your filing status is . 2012 940 tax form . 2012 940 tax form . 2012 940 tax form AND your modified adjusted gross income (modified AGI) is . 2012 940 tax form . 2012 940 tax form . 2012 940 tax form THEN you can take . 2012 940 tax form . 2012 940 tax form . 2012 940 tax form single, head of household, or qualifying widow(er) any amount a full deduction. 2012 940 tax form married filing jointly or separately with a spouse who is not covered by a plan at work any amount a full deduction. 2012 940 tax form married filing jointly with a spouse who is covered by a plan at work $178,000 or less a full deduction. 2012 940 tax form more than $178,000 but less than $188,000 a partial deduction. 2012 940 tax form $188,000 or more no deduction. 2012 940 tax form married filing separately with a spouse who is covered by a plan at work2 less than $10,000 a partial deduction. 2012 940 tax form $10,000 or more no deduction. 2012 940 tax form 1 Modified AGI (adjusted gross income). 2012 940 tax form See Modified adjusted gross income (AGI) , later. 2012 940 tax form  2 You are entitled to the full deduction if you did not live with your spouse at any time during the year. 2012 940 tax form For 2014, if you are not covered by a retirement plan at work and you are married filing jointly with a spouse who is covered by a plan at work, your deduction is phased out if your modified AGI is more than $181,000 but less than $191,000. 2012 940 tax form If your AGI is $191,000 or more, you cannot take a deduction for a contribution to a traditional IRA. 2012 940 tax form Deduction Phaseout The amount of any reduction in the limit on your IRA deduction (phaseout) depends on whether you or your spouse was covered by an employer retirement plan. 2012 940 tax form Covered by a retirement plan. 2012 940 tax form   If you are covered by an employer retirement plan and you did not receive any social security retirement benefits, your IRA deduction may be reduced or eliminated depending on your filing status and modified AGI, as shown in Table 1-2. 2012 940 tax form For 2014, if you are covered by a retirement plan at work, your IRA deduction will not be reduced (phased out) unless your modified AGI is: More than $60,000 but less than $70,000 for a single individual (or head of household), More than $96,000 but less than $116,000 for a married couple filing a joint return (or a qualifying widow(er)), or Less than $10,000 for a married individual filing a separate return. 2012 940 tax form If your spouse is covered. 2012 940 tax form   If you are not covered by an employer retirement plan, but your spouse is, and you did not receive any social security benefits, your IRA deduction may be reduced or eliminated entirely depending on your filing status and modified AGI as shown in Table 1-3. 2012 940 tax form Filing status. 2012 940 tax form   Your filing status depends primarily on your marital status. 2012 940 tax form For this purpose, you need to know if your filing status is single or head of household, married filing jointly or qualifying widow(er), or married filing separately. 2012 940 tax form If you need more information on filing status, see Publication 501, Exemptions, Standard Deduction, and Filing Information. 2012 940 tax form Lived apart from spouse. 2012 940 tax form   If you did not live with your spouse at any time during the year and you file a separate return, your filing status, for this purpose, is single. 2012 940 tax form Modified adjusted gross income (AGI). 2012 940 tax form   You can use Worksheet 1-1 to figure your modified AGI. 2012 940 tax form If you made contributions to your IRA for 2013 and received a distribution from your IRA in 2013, see Both contributions for 2013 and distributions in 2013 , later. 2012 940 tax form    Do not assume that your modified AGI is the same as your compensation. 2012 940 tax form Your modified AGI may include income in addition to your compensation (discussed earlier) such as interest, dividends, and income from IRA distributions. 2012 940 tax form Form 1040. 2012 940 tax form   If you file Form 1040, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following amounts. 2012 940 tax form IRA deduction. 2012 940 tax form Student loan interest deduction. 2012 940 tax form Tuition and fees deduction. 2012 940 tax form Domestic production activities deduction. 2012 940 tax form Foreign earned income exclusion. 2012 940 tax form Foreign housing exclusion or deduction. 2012 940 tax form Exclusion of qualified savings bond interest shown on Form 8815. 2012 940 tax form Exclusion of employer-provided adoption benefits shown on Form 8839. 2012 940 tax form This is your modified AGI. 2012 940 tax form Form 1040A. 2012 940 tax form   If you file Form 1040A, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following amounts. 2012 940 tax form IRA deduction. 2012 940 tax form Student loan interest deduction. 2012 940 tax form Tuition and fees deduction. 2012 940 tax form Exclusion of qualified savings bond interest shown on Form 8815. 2012 940 tax form This is your modified AGI. 2012 940 tax form Form 1040NR. 2012 940 tax form   If you file Form 1040NR, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following amounts. 2012 940 tax form IRA deduction. 2012 940 tax form Student loan interest deduction. 2012 940 tax form Domestic production activities deduction. 2012 940 tax form Exclusion of qualified savings bond interest shown on Form 8815. 2012 940 tax form Exclusion of employer-provided adoption benefits shown on Form 8839. 2012 940 tax form This is your modified AGI. 2012 940 tax form Income from IRA distributions. 2012 940 tax form   If you received distributions in 2013 from one or more traditional IRAs and your traditional IRAs include only deductible contributions, the distributions are fully taxable and are included in your modified AGI. 2012 940 tax form Both contributions for 2013 and distributions in 2013. 2012 940 tax form   If all three of the following apply, any IRA distributions you received in 2013 may be partly tax free and partly taxable. 2012 940 tax form You received distributions in 2013 from one or more traditional IRAs, You made contributions to a traditional IRA for 2013, and Some of those contributions may be nondeductible contributions. 2012 940 tax form (See Nondeductible Contributions and Worksheet 1-2, later. 2012 940 tax form ) If this is your situation, you must figure the taxable part of the traditional IRA distribution before you can figure your modified AGI. 2012 940 tax form To do this, you can use Worksheet 1-5, later. 2012 940 tax form   If at least one of the above does not apply, figure your modified AGI using Worksheet 1-1, later. 2012 940 tax form How To Figure Your Reduced IRA Deduction If you or your spouse is covered by an employer retirement plan and you did not receive any social security benefits, you can figure your reduced IRA deduction by using Worksheet 1-2. 2012 940 tax form Figuring Your Reduced IRA Deduction for 2013. 2012 940 tax form The Instructions for Form 1040, Form 1040A, and Form 1040NR include similar worksheets that you can use instead of the worksheet in this publication. 2012 940 tax form If you or your spouse is covered by an employer retirement plan, and you received any social security benefits, see Social Security Recipients , earlier. 2012 940 tax form Note. 2012 940 tax form If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. 2012 940 tax form Worksheet 1-1. 2012 940 tax form Figuring Your Modified AGI Use this worksheet to figure your modified AGI for traditional IRA purposes. 2012 940 tax form 1. 2012 940 tax form Enter your adjusted gross income (AGI) from Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37, figured without taking into account the amount from Form 1040, line 32; Form 1040A, line 17; or Form 1040NR, line 32 1. 2012 940 tax form   2. 2012 940 tax form Enter any student loan interest deduction from Form 1040, line 33; Form 1040A, line 18; or Form 1040NR, line 33 2. 2012 940 tax form   3. 2012 940 tax form Enter any tuition and fees deduction from Form 1040, line 34, or Form 1040A, line 19 3. 2012 940 tax form   4. 2012 940 tax form Enter any domestic production activities deduction from Form 1040, line 35, or Form 1040NR, line 34 4. 2012 940 tax form   5. 2012 940 tax form Enter any foreign earned income exclusion and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18 5. 2012 940 tax form   6. 2012 940 tax form Enter any foreign housing deduction from Form 2555, line 50 6. 2012 940 tax form   7. 2012 940 tax form Enter any excludable savings bond interest from Form 8815, line 14 7. 2012 940 tax form   8. 2012 940 tax form Enter any excluded employer-provided adoption benefits from Form 8839, line 28 8. 2012 940 tax form   9. 2012 940 tax form Add lines 1 through 8. 2012 940 tax form This is your Modified AGI for traditional IRA purposes 9. 2012 940 tax form   Reporting Deductible Contributions If you file Form 1040, enter your IRA deduction on line 32 of that form. 2012 940 tax form If you file Form 1040A, enter your IRA deduction on line 17 of that form. 2012 940 tax form If you file Form 1040NR, enter your IRA deduction on line 32 of that form. 2012 940 tax form You cannot deduct IRA contributions on Form 1040EZ or Form 1040NR-EZ. 2012 940 tax form Self-employed. 2012 940 tax form   If you are self-employed (a sole proprietor or partner) and have a SIMPLE IRA, enter your deduction for allowable plan contributions on Form 1040, line 28. 2012 940 tax form If you file Form 1040NR, enter your deduction on line 28 of that form. 2012 940 tax form Nondeductible Contributions Although your deduction for IRA contributions may be reduced or eliminated, contributions can be made to your IRA of up to the general limit or, if it applies, the Kay Bailey Hutchison Spousal IRA limit. 2012 940 tax form The difference between your total permitted contributions and your IRA deduction, if any, is your nondeductible contribution. 2012 940 tax form Example. 2012 940 tax form Tony is 29 years old and single. 2012 940 tax form In 2013, he was covered by a retirement plan at work. 2012 940 tax form His salary is $62,000. 2012 940 tax form His modified AGI is $70,000. 2012 940 tax form Tony makes a $5,500 IRA contribution for 2013. 2012 940 tax form Because he was covered by a retirement plan and his modified AGI is above $69,000, he cannot deduct his $5,500 IRA contribution. 2012 940 tax form He must designate this contribution as a nondeductible contribution by reporting it on Form 8606. 2012 940 tax form Repayment of reservist distributions. 2012 940 tax form   Nondeductible contributions may include repayments of qualified reservist distributions. 2012 940 tax form For more information, see Qualified reservist repayments under How Much Can Be Contributed, earlier. 2012 940 tax form Form 8606. 2012 940 tax form   To designate contributions as nondeductible, you must file Form 8606. 2012 940 tax form (See the filled-in Forms 8606 in this chapter. 2012 940 tax form )   You do not have to designate a contribution as nondeductible until you file your tax return. 2012 940 tax form When you file, you can even designate otherwise deductible contributions as nondeductible contributions. 2012 940 tax form   You must file Form 8606 to report nondeductible contributions even if you do not have to file a tax return for the year. 2012 940 tax form    A Form 8606 is not used for the year that you make a rollover from a qualified retirement plan to a traditional IRA and the rollover includes nontaxable amounts. 2012 940 tax form In those situations, a Form 8606 is completed for the year you take a distribution from that IRA. 2012 940 tax form See Form 8606 under Distributions Fully or Partly Taxable, later. 2012 940 tax form Failure to report nondeductible contributions. 2012 940 tax form   If you do not report nondeductible contributions, all of the contributions to your traditional IRA will be treated like deductible contributions when withdrawn. 2012 940 tax form All distributions from your IRA will be taxed unless you can show, with satisfactory evidence, that nondeductible contributions were made. 2012 940 tax form Penalty for overstatement. 2012 940 tax form   If you overstate the amount of nondeductible contributions on your Form 8606 for any tax year, you must pay a penalty of $100 for each overstatement, unless it was due to reasonable cause. 2012 940 tax form Penalty for failure to file Form 8606. 2012 940 tax form   You will have to pay a $50 penalty if you do not file a required Form 8606, unless you can prove that the failure was due to reasonable cause. 2012 940 tax form Tax on earnings on nondeductible contributions. 2012 940 tax form   As long as contributions are within the contribution limits, none of the earnings or gains on contributions (deductible or nondeductible) will be taxed until they are distributed. 2012 940 tax form Cost basis. 2012 940 tax form   You will have a cost basis in your traditional IRA if you made any nondeductible contributions. 2012 940 tax form Your cost basis is the sum of the nondeductible contributions to your IRA minus any withdrawals or distributions of nondeductible contributions. 2012 940 tax form    Commonly, distributions from your traditional IRAs will include both taxable and nontaxable (cost basis) amounts. 2012 940 tax form See Are Distributions Taxable, later, for more information. 2012 940 tax form Recordkeeping. 2012 940 tax form There is a recordkeeping worksheet, Appendix A. 2012 940 tax form Summary Record of Traditional IRA(s) for 2013 , that you can use to keep a record of deductible and nondeductible IRA contributions. 2012 940 tax form Examples — Worksheet for Reduced IRA Deduction for 2013 The following examples illustrate the use of Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013. 2012 940 tax form Example 1. 2012 940 tax form For 2013, Tom and Betty file a joint return on Form 1040. 2012 940 tax form They are both 39 years old. 2012 940 tax form They are both employed and Tom is covered by his employer's retirement plan. 2012 940 tax form Tom's salary is $59,000 and Betty's is $32,555. 2012 940 tax form They each have a traditional IRA and their combined modified AGI, which includes $5,000 interest and dividend income, is $96,555. 2012 940 tax form Because their modified AGI is between $95,000 and $115,000 and Tom is covered by an employer plan, Tom is subject to the deduction phaseout discussed earlier under Limit if Covered by Employer Plan . 2012 940 tax form For 2013, Tom contributed $5,500 to his IRA and Betty contributed $5,500 to hers. 2012 940 tax form Even though they file a joint return, they must use separate worksheets to figure the IRA deduction for each of them. 2012 940 tax form Tom can take a deduction of only $5,080. 2012 940 tax form He can choose to treat the $5,080 as either deductible or nondeductible contributions. 2012 940 tax form He can either leave the $420 ($5,500 − $5,080) of nondeductible contributions in his IRA or withdraw them by April 15, 2014. 2012 940 tax form He decides to treat the $5,080 as deductible contributions and leave the $420 of nondeductible contributions in his IRA. 2012 940 tax form Using Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, Tom figures his deductible and nondeductible amounts as shown on Worksheet 1-2. 2012 940 tax form Figuring Your Reduced IRA Deduction for 2013—Example 1 Illustrated. 2012 940 tax form Betty figures her IRA deduction as follows. 2012 940 tax form Betty can treat all or part of her contributions as either deductible or nondeductible. 2012 940 tax form This is because her $5,500 contribution for 2013 is not subject to the deduction phaseout discussed earlier under Limit if Covered by Employer Plan . 2012 940 tax form She does not need to use Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, because their modified AGI is not within the phaseout range that applies. 2012 940 tax form Betty decides to treat her $5,500 IRA contributions as deductible. 2012 940 tax form The IRA deductions of $5,080 and $5,500 on the joint return for Tom and Betty total $10,580. 2012 940 tax form Example 2. 2012 940 tax form For 2013, Ed and Sue file a joint return on Form 1040. 2012 940 tax form They are both 39 years old. 2012 940 tax form Ed is covered by his employer's retirement plan. 2012 940 tax form Ed's salary is $45,000. 2012 940 tax form Sue had no compensation for the year and did not contribute to an IRA. 2012 940 tax form Sue is not covered by an employer plan. 2012 940 tax form Ed contributed $5,500 to his traditional IRA and $5,500 to a traditional IRA for Sue (a Kay Bailey Hutchison Spousal IRA). 2012 940 tax form Their combined modified AGI, which includes $2,000 interest and dividend income and a large capital gain from the sale of stock, is $180,555. 2012 940 tax form Because the combined modified AGI is $115,000 or more, Ed cannot deduct any of the contribution to his traditional IRA. 2012 940 tax form He can either leave the $5,500 of nondeductible contributions in his IRA or withdraw them by April 15, 2014. 2012 940 tax form Sue figures her IRA deduction as shown on Worksheet 1-2. 2012 940 tax form Figuring Your Reduced IRA Deduction for 2013—Example 2 Illustrated. 2012 940 tax form Worksheet 1-2. 2012 940 tax form Figuring Your Reduced IRA Deduction for 2013 (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status. 2012 940 tax form ) Note. 2012 940 tax form If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. 2012 940 tax form IF you . 2012 940 tax form . 2012 940 tax form . 2012 940 tax form AND your  filing status is . 2012 940 tax form . 2012 940 tax form . 2012 940 tax form AND your modified AGI is over . 2012 940 tax form . 2012 940 tax form . 2012 940 tax form THEN enter on  line 1 below . 2012 940 tax form . 2012 940 tax form . 2012 940 tax form       are covered by an employer plan single or head of household $59,000 $69,000     married filing jointly or qualifying widow(er) $95,000 $115,000     married filing separately $0 $10,000     are not covered by an employer plan, but your spouse is covered married filing jointly $178,000 $188,000     married filing separately $0 $10,000     1. 2012 940 tax form Enter applicable amount from table above 1. 2012 940 tax form   2. 2012 940 tax form Enter your modified AGI (that of both spouses, if married filing jointly) 2. 2012 940 tax form     Note. 2012 940 tax form If line 2 is equal to or more than the amount on line 1, stop here. 2012 940 tax form  Your IRA contributions are not deductible. 2012 940 tax form See Nondeductible Contributions , earlier. 2012 940 tax form     3. 2012 940 tax form Subtract line 2 from line 1. 2012 940 tax form If line 3 is $10,000 or more ($20,000 or more if married filing jointly or qualifying widow(er) and you are covered by an employer plan), stop here. 2012 940 tax form You can take a full IRA deduction for contributions of up to $5,500 ($6,500 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. 2012 940 tax form   4. 2012 940 tax form Multiply line 3 by the percentage below that applies to you. 2012 940 tax form If the result is not a multiple of $10, round it to the next highest multiple of $10. 2012 940 tax form (For example, $611. 2012 940 tax form 40 is rounded to $620. 2012 940 tax form ) However, if the result is less than $200, enter $200. 2012 940 tax form         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. 2012 940 tax form 5% (. 2012 940 tax form 275) (by 32. 2012 940 tax form 5% (. 2012 940 tax form 325) if you are age 50 or older). 2012 940 tax form All others, multiply line 3 by 55% (. 2012 940 tax form 55) (by 65% (. 2012 940 tax form 65) if you are age 50 or older). 2012 940 tax form 4. 2012 940 tax form   5. 2012 940 tax form Enter your compensation minus any deductions on Form 1040 or Form 1040NR, line 27 (deductible part of self-employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). 2012 940 tax form If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. 2012 940 tax form If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. 2012 940 tax form   6. 2012 940 tax form Enter contributions made, or to be made, to your IRA for 2013, but do not enter more than $5,500 ($6,500 if you are age 50 or older). 2012 940 tax form If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. 2012 940 tax form 6. 2012 940 tax form   7. 2012 940 tax form IRA deduction. 2012 940 tax form Compare lines 4, 5, and 6. 2012 940 tax form Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 1040NR line for your IRA, whichever applies. 2012 940 tax form If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. 2012 940 tax form   8. 2012 940 tax form Nondeductible contribution. 2012 940 tax form Subtract line 7 from line 5 or 6, whichever is smaller. 2012 940 tax form  Enter the result here and on line 1 of your Form 8606 8. 2012 940 tax form   Worksheet 1-2. 2012 940 tax form Figuring Your Reduced IRA Deduction for 2013—Example 1 Illustrated (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status. 2012 940 tax form ) Note. 2012 940 tax form If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. 2012 940 tax form IF you . 2012 940 tax form . 2012 940 tax form . 2012 940 tax form AND your  filing status is . 2012 940 tax form . 2012 940 tax form . 2012 940 tax form AND your modified AGI is over . 2012 940 tax form . 2012 940 tax form . 2012 940 tax form THEN enter on  line 1 below . 2012 940 tax form . 2012 940 tax form . 2012 940 tax form       are covered by an employer plan single or head of household $59,000 $69,000     married filing jointly or qualifying widow(er) $95,000 $115,000     married filing separately $0 $10,000     are not covered by an employer plan, but your spouse is covered married filing jointly $178,000 $188,000     married filing separately $0 $10,000     1. 2012 940 tax form Enter applicable amount from table above 1. 2012 940 tax form 115,000 2. 2012 940 tax form Enter your modified AGI (that of both spouses, if married filing jointly) 2. 2012 940 tax form 96,555   Note. 2012 940 tax form If line 2 is equal to or more than the amount on line 1, stop here. 2012 940 tax form  Your IRA contributions are not deductible. 2012 940 tax form See Nondeductible Contributions , earlier. 2012 940 tax form     3. 2012 940 tax form Subtract line 2 from line 1. 2012 940 tax form If line 3 is $10,000 or more ($20,000 or more if married filing jointly or qualifying widow(er) and you are covered by an employer plan), stop here. 2012 940 tax form You can take a full IRA deduction for contributions of up to $5,500 ($6,500 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. 2012 940 tax form 18,445 4. 2012 940 tax form Multiply line 3 by the percentage below that applies to you. 2012 940 tax form If the result is not a multiple of $10, round it to the next highest multiple of $10. 2012 940 tax form (For example, $611. 2012 940 tax form 40 is rounded to $620. 2012 940 tax form ) However, if the result is less than $200, enter $200. 2012 940 tax form         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. 2012 940 tax form 5% (. 2012 940 tax form 275) (by 32. 2012 940 tax form 5% (. 2012 940 tax form 325) if you are age 50 or older). 2012 940 tax form All others, multiply line 3 by 55% (. 2012 940 tax form 55) (by 65% (. 2012 940 tax form 65) if you are age 50 or older). 2012 940 tax form 4. 2012 940 tax form 5,080 5. 2012 940 tax form Enter your compensation minus any deductions on Form 1040 or Form 1040NR, line 27 (deductible part of self-employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). 2012 940 tax form If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. 2012 940 tax form If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. 2012 940 tax form 59,000 6. 2012 940 tax form Enter contributions made, or to be made, to your IRA for 2013, but do not enter more than $5,500 ($6,500 if you are age 50 or older). 2012 940 tax form If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. 2012 940 tax form 6. 2012 940 tax form 5,500 7. 2012 940 tax form IRA deduction. 2012 940 tax form Compare lines 4, 5, and 6. 2012 940 tax form Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 1040NR line for your IRA, whichever applies. 2012 940 tax form If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. 2012 940 tax form 5,080 8. 2012 940 tax form Nondeductible contribution. 2012 940 tax form Subtract line 7 from line 5 or 6, whichever is smaller. 2012 940 tax form  Enter the result here and on line 1 of your Form 8606 8. 2012 940 tax form 420 Worksheet 1-2. 2012 940 tax form Figuring Your Reduced IRA Deduction for 2013—Example 2 Illustrated (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status. 2012 940 tax form ) Note. 2012 940 tax form If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. 2012 940 tax form IF you . 2012 940 tax form . 2012 940 tax form . 2012 940 tax form AND your  filing status is . 2012 940 tax form . 2012 940 tax form . 2012 940 tax form AND your modified AGI is over . 2012 940 tax form . 2012 940 tax form . 2012 940 tax form THEN enter on  line 1 below . 2012 940 tax form . 2012 940 tax form . 2012 940 tax form       are covered by an employer plan single or head of household $59,000 $69,000     married filing jointly or qualifying widow(er) $95,000 $115,000     married filing separately $0 $10,000     are not covered by an employer plan, but your spouse is covered married filing jointly $178,000 $188,000     married filing separately $0 $10,000     1. 2012 940 tax form Enter applicable amount from table above 1. 2012 940 tax form 188,000 2. 2012 940 tax form Enter your modified AGI (that of both spouses, if married filing jointly) 2. 2012 940 tax form 180,555   Note. 2012 940 tax form If line 2 is equal to or more than the amount on line 1, stop here. 2012 940 tax form  Your IRA contributions are not deductible. 2012 940 tax form See Nondeductible Contributions , earlier. 2012 940 tax form     3. 2012 940 tax form Subtract line 2 from line 1. 2012 940 tax form If line 3 is $10,000 or more ($20,000 or more if married filing jointly or qualifying widow(er) and you are covered by an employer plan), stop here. 2012 940 tax form You can take a full IRA deduction for contributions of up to $5,500 ($6,500 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. 2012 940 tax form 7,445 4. 2012 940 tax form Multiply line 3 by the percentage below that applies to you. 2012 940 tax form If the result is not a multiple of $10, round it to the next highest multiple of $10. 2012 940 tax form (For example, $611. 2012 940 tax form 40 is rounded to $620. 2012 940 tax form ) However, if the result is less than $200, enter $200. 2012 940 tax form         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. 2012 940 tax form 5% (. 2012 940 tax form 275) (by 32. 2012 940 tax form 5% (. 2012 940 tax form 325) if you are age 50 or older). 2012 940 tax form All others, multiply line 3 by 55% (. 2012 940 tax form 55) (by 65% (. 2012 940 tax form 65) if you are age 50 or older). 2012 940 tax form 4. 2012 940 tax form 4,100 5. 2012 940 tax form Enter your compensation minus any deductions on Form 1040 or Form 1040NR, line 27 (deductible part of self-employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). 2012 940 tax form If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. 2012 940 tax form If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. 2012 940 tax form 39,500 6. 2012 940 tax form Enter contributions made, or to be made, to your IRA for 2013, but do not enter more than $5,500 ($6,500 if you are age 50 or older). 2012 940 tax form If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. 2012 940 tax form 6. 2012 940 tax form 5,500 7. 2012 940 tax form IRA deduction. 2012 940 tax form Compare lines 4, 5, and 6. 2012 940 tax form Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 1040NR line for your IRA, whichever applies. 2012 940 tax form If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. 2012 940 tax form 4,100 8. 2012 940 tax form Nondeductible contribution. 2012 940 tax form Subtract line 7 from line 5 or 6, whichever is smaller. 2012 940 tax form  Enter the result here and on line 1 of your Form 8606 8. 2012 940 tax form 1,400 What if You Inherit an IRA? If you inherit a traditional IRA, you are called a beneficiary. 2012 940 tax form A beneficiary can be any person or entity the owner chooses to receive the benefits of the IRA after he or she dies. 2012 940 tax form Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive. 2012 940 tax form Inherited from spouse. 2012 940 tax form   If you inherit a traditional IRA from your spouse, you generally have the following three choices. 2012 940 tax form You can: Treat it as your own IRA by designating yourself as the account owner. 2012 940 tax form Treat it as your own by rolling it over into your IRA, or to the extent it is taxable, into a: Qualified employer plan, Qualified employee annuity plan (section 403(a) plan), Tax-sheltered annuity plan (s