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Amend Irs Return

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Amend Irs Return

Amend irs return Publication 600 - Introductory Material Table of Contents Introduction Introduction The Tax Relief and Health Care Act of 2006 extended the election to deduct state and local general sales taxes for 2006. Amend irs return The act was enacted after Schedule A (Form 1040), Itemized Deductions, and its instructions were printed. Amend irs return Because we were not able to include the instructions for figuring the deduction in the Schedule A instructions, we are providing this publication to help you figure this deduction. Amend irs return You can elect to deduct state and local general sales taxes instead of state and local income taxes as a deduction on Schedule A. Amend irs return You cannot deduct both. Amend irs return To figure your deduction, you can use either: Your actual expenses, or The optional sales tax tables plus the general sales taxes paid on certain specified items. Amend irs return Prev  Up  Next   Home   More Online Publications
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The Amend Irs Return

Amend irs return 1. Amend irs return   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. Amend irs return When repayment contributions can be made. Amend irs return No deduction. Amend irs return Reserve component. Amend irs return Figuring your IRA deduction. Amend irs return Reporting the repayment. Amend irs return Example. Amend irs return 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. Amend irs return 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. Amend irs return Can You Move Retirement Plan Assets?Transfers to Roth IRAs from other retirement plans. Amend irs return 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. Amend irs return 2013 Reporting. Amend irs return Additional reporting requirements if you made the election to treat a January 2013 QCD as made in 2012. Amend irs return One-time transfer. Amend irs return Testing period rules apply. Amend irs return More information. Amend irs return 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. Amend irs return  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. Amend irs return 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. Amend irs return For more information, see How Much Can Be Contributed? in this chapter. Amend irs return Modified AGI limit for traditional IRA contributions increased. Amend irs return  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. Amend irs return 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. Amend irs return If your modified AGI is $188,000 or more, you cannot take a deduction for contributions to a traditional IRA. Amend irs return See How Much Can You Deduct? in this chapter. Amend irs return Net Investment Income Tax. Amend irs return  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). Amend irs return However, these distributions are taken into account when determining the modified adjusted gross income threshold. Amend irs return Distributions from a nonqualified retirement plan are included in net investment income. Amend irs return See Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions for more information. Amend irs return What's New for 2014 Modified AGI limit for traditional IRA contributions increased. Amend irs return  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. Amend irs return 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. Amend irs return If your modified AGI is $191,000 or more, you cannot take a deduction for contributions to a traditional IRA. Amend irs return Introduction This chapter discusses the original IRA. Amend irs return In this publication the original IRA (sometimes called an ordinary or regular IRA) is referred to as a “traditional IRA. Amend irs return ” A traditional IRA is any IRA that is not a Roth IRA or a SIMPLE IRA. Amend irs return 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. Amend irs return Generally, amounts in your IRA, including earnings and gains, are not taxed until they are distributed. Amend irs return 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. Amend irs return You can have a traditional IRA whether or not you are covered by any other retirement plan. Amend irs return However, you may not be able to deduct all of your contributions if you or your spouse is covered by an employer retirement plan. Amend irs return See How Much Can You Deduct , later. Amend irs return Both spouses have compensation. Amend irs return   If both you and your spouse have compensation and are under age 70½, each of you can open an IRA. Amend irs return You cannot both participate in the same IRA. Amend irs return If you file a joint return, only one of you needs to have compensation. Amend irs return What Is Compensation? Generally, compensation is what you earn from working. Amend irs return For a summary of what compensation does and does not include, see Table 1-1. Amend irs return Compensation includes all of the items discussed next (even if you have more than one type). Amend irs return Wages, salaries, etc. Amend irs return   Wages, salaries, tips, professional fees, bonuses, and other amounts you receive for providing personal services are compensation. Amend irs return 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). Amend irs return Scholarship and fellowship payments are compensation for IRA purposes only if shown in box 1 of Form W-2. Amend irs return Commissions. Amend irs return   An amount you receive that is a percentage of profits or sales price is compensation. Amend irs return Self-employment income. Amend irs return   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. Amend irs return   Compensation includes earnings from self-employment even if they are not subject to self-employment tax because of your religious beliefs. Amend irs return Self-employment loss. Amend irs return   If you have a net loss from self-employment, do not subtract the loss from your salaries or wages when figuring your total compensation. Amend irs return Alimony and separate maintenance. Amend irs return   For IRA purposes, compensation includes any taxable alimony and separate maintenance payments you receive under a decree of divorce or separate maintenance. Amend irs return Nontaxable combat pay. Amend irs return   If you were a member of the U. Amend irs return S. Amend irs return Armed Forces, compensation includes any nontaxable combat pay you received. Amend irs return This amount should be reported in box 12 of your 2013 Form W-2 with code Q. Amend irs return Table 1-1. Amend irs return Compensation for Purposes of an IRA Includes . Amend irs return . Amend irs return . Amend irs return Does not include . Amend irs return . Amend irs return . Amend irs return   earnings and profits from property. Amend irs return wages, salaries, etc. Amend irs return     interest and dividend income. Amend irs return commissions. Amend irs return     pension or annuity income. Amend irs return self-employment income. Amend irs return     deferred compensation. Amend irs return alimony and separate maintenance. Amend irs return     income from certain  partnerships. Amend irs return nontaxable combat pay. Amend irs return     any amounts you exclude from income. Amend irs return     What Is Not Compensation? Compensation does not include any of the following items. Amend irs return Earnings and profits from property, such as rental income, interest income, and dividend income. Amend irs return Pension or annuity income. Amend irs return Deferred compensation received (compensation payments postponed from a past year). Amend irs return Income from a partnership for which you do not provide services that are a material income-producing factor. Amend irs return Conservation Reserve Program (CRP) payments reported on Schedule SE (Form 1040), line 1b. Amend irs return Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs. Amend irs return When Can a Traditional IRA Be Opened? You can open a traditional IRA at any time. Amend irs return However, the time for making contributions for any year is limited. Amend irs return See When Can Contributions Be Made , later. Amend irs return How Can a Traditional IRA Be Opened? You can open different kinds of IRAs with a variety of organizations. Amend irs return You can open an IRA at a bank or other financial institution or with a mutual fund or life insurance company. Amend irs return You can also open an IRA through your stockbroker. Amend irs return Any IRA must meet Internal Revenue Code requirements. Amend irs return The requirements for the various arrangements are discussed below. Amend irs return Kinds of traditional IRAs. Amend irs return   Your traditional IRA can be an individual retirement account or annuity. Amend irs return It can be part of either a simplified employee pension (SEP) or an employer or employee association trust account. Amend irs return 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. Amend irs return The account is created by a written document. Amend irs return The document must show that the account meets all of the following requirements. Amend irs return 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. Amend irs return The trustee or custodian generally cannot accept contributions of more than the deductible amount for the year. Amend irs return However, rollover contributions and employer contributions to a simplified employee pension (SEP) can be more than this amount. Amend irs return Contributions, except for rollover contributions, must be in cash. Amend irs return See Rollovers , later. Amend irs return You must have a nonforfeitable right to the amount at all times. Amend irs return Money in your account cannot be used to buy a life insurance policy. Amend irs return Assets in your account cannot be combined with other property, except in a common trust fund or common investment fund. Amend irs return You must start receiving distributions by April 1 of the year following the year in which you reach age 70½. Amend irs return See When Must You Withdraw Assets? (Required Minimum Distributions) , later. Amend irs return Individual Retirement Annuity You can open an individual retirement annuity by purchasing an annuity contract or an endowment contract from a life insurance company. Amend irs return 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. Amend irs return An individual retirement annuity must meet all the following requirements. Amend irs return Your entire interest in the contract must be nonforfeitable. Amend irs return The contract must provide that you cannot transfer any portion of it to any person other than the issuer. Amend irs return There must be flexible premiums so that if your compensation changes, your payment can also change. Amend irs return This provision applies to contracts issued after November 6, 1978. Amend irs return 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. Amend irs return Distributions must begin by April 1 of the year following the year in which you reach age 70½. Amend irs return See When Must You Withdraw Assets? (Required Minimum Distributions) , later. Amend irs return Individual Retirement Bonds The sale of individual retirement bonds issued by the federal government was suspended after April 30, 1982. Amend irs return The bonds have the following features. Amend irs return They stop earning interest when you reach age 70½. Amend irs return If you die, interest will stop 5 years after your death, or on the date you would have reached age 70½, whichever is earlier. Amend irs return You cannot transfer the bonds. Amend irs return If you cash (redeem) the bonds before the year in which you reach age 59½, you may be subject to a 10% additional tax. Amend irs return See Age 59½ Rule under Early Distributions, later. Amend irs return You can roll over redemption proceeds into IRAs. Amend irs return 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. Amend irs return Generally, distributions from SEP IRAs are subject to the withdrawal and tax rules that apply to traditional IRAs. Amend irs return See Publication 560 for more information about SEPs. Amend irs return 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. Amend irs return The requirements for individual retirement accounts apply to these traditional IRAs. Amend irs return 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. Amend irs return 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. Amend irs return The disclosure statement must explain certain items in plain language. Amend irs return 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. Amend irs return This explanation must appear at the beginning of the disclosure statement. Amend irs return If you revoke your IRA within the revocation period, the sponsor must return to you the entire amount you paid. Amend irs return 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. Amend irs return These requirements apply to all sponsors. Amend irs return How Much Can Be Contributed? There are limits and other rules that affect the amount that can be contributed to a traditional IRA. Amend irs return These limits and rules are explained below. Amend irs return Community property laws. Amend irs return   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. Amend irs return This is the rule even in states with community property laws. Amend irs return Brokers' commissions. Amend irs return   Brokers' commissions paid in connection with your traditional IRA are subject to the contribution limit. Amend irs return For information about whether you can deduct brokers' commissions, see Brokers' commissions , later, under How Much Can You Deduct. Amend irs return Trustees' fees. Amend irs return   Trustees' administrative fees are not subject to the contribution limit. Amend irs return For information about whether you can deduct trustees' fees, see Trustees' fees , later, under How Much Can You Deduct. Amend irs return Qualified reservist repayments. Amend irs return   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. Amend irs return 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. Amend irs return 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. Amend irs return Limit. Amend irs return   Your qualified reservist repayments cannot be more than your qualified reservist distributions, explained under Early Distributions , later. Amend irs return When repayment contributions can be made. Amend irs return   You cannot make these repayment contributions later than the date that is 2 years after your active duty period ends. Amend irs return No deduction. Amend irs return   You cannot deduct qualified reservist repayments. Amend irs return Reserve component. Amend irs return   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. Amend irs return Figuring your IRA deduction. Amend irs return   The repayment of qualified reservist distributions does not affect the amount you can deduct as an IRA contribution. Amend irs return Reporting the repayment. Amend irs return   If you repay a qualified reservist distribution, include the amount of the repayment with nondeductible contributions on line 1 of Form 8606. Amend irs return Example. Amend irs return   In 2013, your IRA contribution limit is $5,500. Amend irs return However, because of your filing status and AGI, the limit on the amount you can deduct is $3,500. Amend irs return You can make a nondeductible contribution of $2,000 ($5,500 - $3,500). Amend irs return In an earlier year you received a $3,000 qualified reservist distribution, which you would like to repay this year. Amend irs return   For 2013, you can contribute a total of $8,500 to your IRA. Amend irs return 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. Amend irs return You contribute the maximum allowable for the year. Amend irs return 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. Amend irs return The qualified reservist repayment is not deductible. Amend irs return Contributions on your behalf to a traditional IRA reduce your limit for contributions to a Roth IRA. Amend irs return See chapter 2 for information about Roth IRAs. Amend irs return 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. Amend irs return Note. Amend irs return 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). Amend irs return 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. Amend irs return (See Nondeductible Contributions , later. Amend irs return ) Qualified reservist repayments do not affect this limit. Amend irs return Examples. Amend irs return George, who is 34 years old and single, earns $24,000 in 2013. Amend irs return His IRA contributions for 2013 are limited to $5,500. Amend irs return Danny, an unmarried college student working part time, earns $3,500 in 2013. Amend irs return His IRA contributions for 2013 are limited to $3,500, the amount of his compensation. Amend irs return More than one IRA. Amend irs return   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. Amend irs return Annuity or endowment contracts. Amend irs return   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. Amend irs return If more than this amount is contributed, the annuity or endowment contract is disqualified. Amend irs return 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. Amend irs return Your spouse's IRA contribution for the year to a traditional IRA. Amend irs return Any contributions for the year to a Roth IRA on behalf of your spouse. Amend irs return 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). Amend irs return Note. Amend irs return 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). Amend irs return Example. Amend irs return Kristin, a full-time student with no taxable compensation, marries Carl during the year. Amend irs return Neither of them was age 50 by the end of 2013. Amend irs return For the year, Carl has taxable compensation of $30,000. Amend irs return He plans to contribute (and deduct) $5,500 to a traditional IRA. Amend irs return If he and Kristin file a joint return, each can contribute $5,500 to a traditional IRA. Amend irs return 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. Amend irs return 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). Amend irs return 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. Amend irs return 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. Amend irs return See How Much Can You Deduct , later. Amend irs return Example. Amend irs return Tom and Darcy are married and both are 53. Amend irs return They both work and each has a traditional IRA. Amend irs return Tom earned $3,800 and Darcy earned $48,000 in 2013. Amend irs return 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. Amend irs return They can contribute up to $6,500 to Darcy's IRA. Amend irs return If they file separate returns, the amount that can be contributed to Tom's IRA is limited by his earned income, $3,800. Amend irs return 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. Amend irs return Example. Amend irs return Rafael, who is 40, earns $30,000 in 2013. Amend irs return Although he can contribute up to $5,500 for 2013, he contributes only $3,000. Amend irs return After April 15, 2014, Rafael cannot make up the difference between his actual contributions for 2013 ($3,000) and his 2013 limit ($5,500). Amend irs return He cannot contribute $2,500 more than the limit for any later year. Amend irs return 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. Amend irs return However, a penalty or additional tax may apply. Amend irs return See Excess Contributions , later, under What Acts Result in Penalties or Additional Taxes. Amend irs return 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). Amend irs return Contributions must be in the form of money (cash, check, or money order). Amend irs return Property cannot be contributed. Amend irs return Although property cannot be contributed, your IRA may invest in certain property. Amend irs return For example, your IRA may purchase shares of stock. Amend irs return For other restrictions on the use of funds in your IRA, see Prohibited Transactions , later in this chapter. Amend irs return You may be able to transfer or roll over certain property from one retirement plan to another. Amend irs return See the discussion of rollovers and other transfers later in this chapter under Can You Move Retirement Plan Assets . Amend irs return 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. Amend irs return For details, see the instructions for your income tax return or Form 8888, Allocation of Refund (Including Savings Bond Purchases). Amend irs return Contributions can be made to your traditional IRA for each year that you receive compensation and have not reached age 70½. Amend irs return 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. Amend irs return See Who Can Open a Traditional IRA , earlier. Amend irs return 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. Amend irs return Contributions can resume for any years that you qualify. Amend irs return Contributions must be made by due date. Amend irs return   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. Amend irs return 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. Amend irs return Age 70½ rule. Amend irs return   Contributions cannot be made to your traditional IRA for the year in which you reach age 70½ or for any later year. Amend irs return   You attain age 70½ on the date that is 6 calendar months after the 70th anniversary of your birth. Amend irs return If you were born on or before June 30, 1943, you cannot contribute for 2013 or any later year. Amend irs return Designating year for which contribution is made. Amend irs return   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. Amend irs return 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). Amend irs return Filing before a contribution is made. Amend irs return    You can file your return claiming a traditional IRA contribution before the contribution is actually made. Amend irs return Generally, the contribution must be made by the due date of your return, not including extensions. Amend irs return Contributions not required. Amend irs return   You do not have to contribute to your traditional IRA for every tax year, even if you can. Amend irs return 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 . Amend irs return However, if you or your spouse was covered by an employer retirement plan, you may not be able to deduct this amount. Amend irs return See Limit if Covered by Employer Plan , later. Amend irs return You may be able to claim a credit for contributions to your traditional IRA. Amend irs return For more information, see chapter 4. Amend irs return Trustees' fees. Amend irs return   Trustees' administrative fees that are billed separately and paid in connection with your traditional IRA are not deductible as IRA contributions. Amend irs return However, they may be deductible as a miscellaneous itemized deduction on Schedule A (Form 1040). Amend irs return For information about miscellaneous itemized deductions, see Publication 529, Miscellaneous Deductions. Amend irs return Brokers' commissions. Amend irs return   These commissions are part of your IRA contribution and, as such, are deductible subject to the limits. Amend irs return Full deduction. Amend irs return   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. Amend irs return   This limit is reduced by any contributions made to a 501(c)(18) plan on your behalf. Amend irs return Kay Bailey Hutchison Spousal IRA. Amend irs return   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. Amend irs return The IRA deduction for the year of the spouse with the greater compensation. Amend irs return Any designated nondeductible contribution for the year made on behalf of the spouse with the greater compensation. Amend irs return Any contributions for the year to a Roth IRA on behalf of the spouse with the greater compensation. Amend irs return   This limit is reduced by any contributions to a section 501(c)(18) plan on behalf of the spouse with the lesser compensation. Amend irs return Note. Amend irs return 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. Amend irs return After a divorce or legal separation, you can deduct only the contributions to your own IRA. Amend irs return Your deductions are subject to the rules for single individuals. Amend irs return Covered by an employer retirement plan. Amend irs return   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. Amend irs return This is discussed later under Limit if Covered by Employer Plan . Amend irs return Limits on the amount you can deduct do not affect the amount that can be contributed. Amend irs return 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. Amend irs return The “Retirement Plan” box should be checked if you were covered. Amend irs return Reservists and volunteer firefighters should also see Situations in Which You Are Not Covered , later. Amend irs return If you are not certain whether you were covered by your employer's retirement plan, you should ask your employer. Amend irs return Federal judges. Amend irs return   For purposes of the IRA deduction, federal judges are covered by an employer plan. Amend irs return For Which Year(s) Are You Covered? Special rules apply to determine the tax years for which you are covered by an employer plan. Amend irs return These rules differ depending on whether the plan is a defined contribution plan or a defined benefit plan. Amend irs return Tax year. Amend irs return   Your tax year is the annual accounting period you use to keep records and report income and expenses on your income tax return. Amend irs return For almost all people, the tax year is the calendar year. Amend irs return Defined contribution plan. Amend irs return   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. Amend irs return However, also see Situations in Which You Are Not Covered , later. Amend irs return   A defined contribution plan is a plan that provides for a separate account for each person covered by the plan. Amend irs return In a defined contribution plan, the amount to be contributed to each participant's account is spelled out in the plan. Amend irs return 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. Amend irs return Types of defined contribution plans include profit-sharing plans, stock bonus plans, and money purchase pension plans. Amend irs return Example. Amend irs return Company A has a money purchase pension plan. Amend irs return Its plan year is from July 1 to June 30. Amend irs return The plan provides that contributions must be allocated as of June 30. Amend irs return Bob, an employee, leaves Company A on December 31, 2012. Amend irs return The contribution for the plan year ending on June 30, 2013, is made February 15, 2014. Amend irs return Because an amount is contributed to Bob's account for the plan year, Bob is covered by the plan for his 2013 tax year. Amend irs return   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. Amend irs return 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. Amend irs return 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. Amend irs return Example. Amend irs return Mickey was covered by a profit-sharing plan and left the company on December 31, 2012. Amend irs return The plan year runs from July 1 to June 30. Amend irs return 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. Amend irs return 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. Amend irs return 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. Amend irs return 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. Amend irs return On December 31, 2013, the company decided to contribute to the plan for the plan year ending June 30, 2013. Amend irs return That contribution was made on February 15, 2014. Amend irs return Mickey is an active participant in the plan for his 2014 tax year but not for his 2013 tax year. Amend irs return No vested interest. Amend irs return   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. Amend irs return Defined benefit plan. Amend irs return   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. Amend irs return 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. Amend irs return   A defined benefit plan is any plan that is not a defined contribution plan. Amend irs return In a defined benefit plan, the level of benefits to be provided to each participant is spelled out in the plan. Amend irs return The plan administrator figures the amount needed to provide those benefits and those amounts are contributed to the plan. Amend irs return Defined benefit plans include pension plans and annuity plans. Amend irs return Example. Amend irs return 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. Amend irs return Nick leaves Company B on December 31, 2012. Amend irs return 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. Amend irs return No vested interest. Amend irs return   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. Amend irs return 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. Amend irs return Social security or railroad retirement. Amend irs return   Coverage under social security or railroad retirement is not coverage under an employer retirement plan. Amend irs return Benefits from previous employer's plan. Amend irs return   If you receive retirement benefits from a previous employer's plan, you are not covered by that plan. Amend irs return Reservists. Amend irs return   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. Amend irs return You are not covered by the plan if both of the following conditions are met. Amend irs return 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. Amend irs return You did not serve more than 90 days on active duty during the year (not counting duty for training). Amend irs return Volunteer firefighters. Amend irs return   If the only reason you participate in a plan is because you are a volunteer firefighter, you may not be covered by the plan. Amend irs return You are not covered by the plan if both of the following conditions are met. Amend irs return 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. Amend irs return Your accrued retirement benefits at the beginning of the year will not provide more than $1,800 per year at retirement. Amend irs return 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. Amend irs return Your deduction is also affected by how much income you had and by your filing status. Amend irs return Your deduction may also be affected by social security benefits you received. Amend irs return Reduced or no deduction. Amend irs return   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. Amend irs return   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. Amend irs return These amounts vary depending on your filing status. Amend irs return   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 . Amend irs return 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. Amend irs return 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. Amend irs return You received social security benefits. Amend irs return You received taxable compensation. Amend irs return Contributions were made to your traditional IRA. Amend irs return You or your spouse was covered by an employer retirement plan. Amend irs return 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. Amend irs return Appendix B includes an example with filled-in worksheets to assist you. Amend irs return Table 1-2. Amend irs return 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. Amend irs return IF your filing status is . Amend irs return . Amend irs return . Amend irs return AND your modified adjusted gross income (modified AGI) is . Amend irs return . Amend irs return . Amend irs return THEN you can take . Amend irs return . Amend irs return . Amend irs return single or head of household $59,000 or less a full deduction. Amend irs return more than $59,000 but less than $69,000 a partial deduction. Amend irs return $69,000 or more no deduction. Amend irs return married filing jointly or  qualifying widow(er) $95,000 or less a full deduction. Amend irs return more than $95,000 but less than $115,000 a partial deduction. Amend irs return $115,000 or more no deduction. Amend irs return married filing separately2 less than $10,000 a partial deduction. Amend irs return $10,000 or more no deduction. Amend irs return 1 Modified AGI (adjusted gross income). Amend irs return See Modified adjusted gross income (AGI) , later. Amend irs return  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). Amend irs return Table 1-3. Amend irs return 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. Amend irs return IF your filing status is . Amend irs return . Amend irs return . Amend irs return AND your modified adjusted gross income (modified AGI) is . Amend irs return . Amend irs return . Amend irs return THEN you can take . Amend irs return . Amend irs return . Amend irs return single, head of household, or qualifying widow(er) any amount a full deduction. Amend irs return married filing jointly or separately with a spouse who is not covered by a plan at work any amount a full deduction. Amend irs return married filing jointly with a spouse who is covered by a plan at work $178,000 or less a full deduction. Amend irs return more than $178,000 but less than $188,000 a partial deduction. Amend irs return $188,000 or more no deduction. Amend irs return married filing separately with a spouse who is covered by a plan at work2 less than $10,000 a partial deduction. Amend irs return $10,000 or more no deduction. Amend irs return 1 Modified AGI (adjusted gross income). Amend irs return See Modified adjusted gross income (AGI) , later. Amend irs return  2 You are entitled to the full deduction if you did not live with your spouse at any time during the year. Amend irs return 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. Amend irs return If your AGI is $191,000 or more, you cannot take a deduction for a contribution to a traditional IRA. Amend irs return 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. Amend irs return Covered by a retirement plan. Amend irs return   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. Amend irs return 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. Amend irs return If your spouse is covered. Amend irs return   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. Amend irs return Filing status. Amend irs return   Your filing status depends primarily on your marital status. Amend irs return 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. Amend irs return If you need more information on filing status, see Publication 501, Exemptions, Standard Deduction, and Filing Information. Amend irs return Lived apart from spouse. Amend irs return   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. Amend irs return Modified adjusted gross income (AGI). Amend irs return   You can use Worksheet 1-1 to figure your modified AGI. Amend irs return 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. Amend irs return    Do not assume that your modified AGI is the same as your compensation. Amend irs return Your modified AGI may include income in addition to your compensation (discussed earlier) such as interest, dividends, and income from IRA distributions. Amend irs return Form 1040. Amend irs return   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. Amend irs return IRA deduction. Amend irs return Student loan interest deduction. Amend irs return Tuition and fees deduction. Amend irs return Domestic production activities deduction. Amend irs return Foreign earned income exclusion. Amend irs return Foreign housing exclusion or deduction. Amend irs return Exclusion of qualified savings bond interest shown on Form 8815. Amend irs return Exclusion of employer-provided adoption benefits shown on Form 8839. Amend irs return This is your modified AGI. Amend irs return Form 1040A. Amend irs return   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. Amend irs return IRA deduction. Amend irs return Student loan interest deduction. Amend irs return Tuition and fees deduction. Amend irs return Exclusion of qualified savings bond interest shown on Form 8815. Amend irs return This is your modified AGI. Amend irs return Form 1040NR. Amend irs return   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. Amend irs return IRA deduction. Amend irs return Student loan interest deduction. Amend irs return Domestic production activities deduction. Amend irs return Exclusion of qualified savings bond interest shown on Form 8815. Amend irs return Exclusion of employer-provided adoption benefits shown on Form 8839. Amend irs return This is your modified AGI. Amend irs return Income from IRA distributions. Amend irs return   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. Amend irs return Both contributions for 2013 and distributions in 2013. Amend irs return   If all three of the following apply, any IRA distributions you received in 2013 may be partly tax free and partly taxable. Amend irs return 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. Amend irs return (See Nondeductible Contributions and Worksheet 1-2, later. Amend irs return ) If this is your situation, you must figure the taxable part of the traditional IRA distribution before you can figure your modified AGI. Amend irs return To do this, you can use Worksheet 1-5, later. Amend irs return   If at least one of the above does not apply, figure your modified AGI using Worksheet 1-1, later. Amend irs return 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. Amend irs return Figuring Your Reduced IRA Deduction for 2013. Amend irs return The Instructions for Form 1040, Form 1040A, and Form 1040NR include similar worksheets that you can use instead of the worksheet in this publication. Amend irs return If you or your spouse is covered by an employer retirement plan, and you received any social security benefits, see Social Security Recipients , earlier. Amend irs return Note. Amend irs return If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. Amend irs return Worksheet 1-1. Amend irs return Figuring Your Modified AGI Use this worksheet to figure your modified AGI for traditional IRA purposes. Amend irs return 1. Amend irs return 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. Amend irs return   2. Amend irs return Enter any student loan interest deduction from Form 1040, line 33; Form 1040A, line 18; or Form 1040NR, line 33 2. Amend irs return   3. Amend irs return Enter any tuition and fees deduction from Form 1040, line 34, or Form 1040A, line 19 3. Amend irs return   4. Amend irs return Enter any domestic production activities deduction from Form 1040, line 35, or Form 1040NR, line 34 4. Amend irs return   5. Amend irs return Enter any foreign earned income exclusion and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18 5. Amend irs return   6. Amend irs return Enter any foreign housing deduction from Form 2555, line 50 6. Amend irs return   7. Amend irs return Enter any excludable savings bond interest from Form 8815, line 14 7. Amend irs return   8. Amend irs return Enter any excluded employer-provided adoption benefits from Form 8839, line 28 8. Amend irs return   9. Amend irs return Add lines 1 through 8. Amend irs return This is your Modified AGI for traditional IRA purposes 9. Amend irs return   Reporting Deductible Contributions If you file Form 1040, enter your IRA deduction on line 32 of that form. Amend irs return If you file Form 1040A, enter your IRA deduction on line 17 of that form. Amend irs return If you file Form 1040NR, enter your IRA deduction on line 32 of that form. Amend irs return You cannot deduct IRA contributions on Form 1040EZ or Form 1040NR-EZ. Amend irs return Self-employed. Amend irs return   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. Amend irs return If you file Form 1040NR, enter your deduction on line 28 of that form. Amend irs return 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. Amend irs return The difference between your total permitted contributions and your IRA deduction, if any, is your nondeductible contribution. Amend irs return Example. Amend irs return Tony is 29 years old and single. Amend irs return In 2013, he was covered by a retirement plan at work. Amend irs return His salary is $62,000. Amend irs return His modified AGI is $70,000. Amend irs return Tony makes a $5,500 IRA contribution for 2013. Amend irs return Because he was covered by a retirement plan and his modified AGI is above $69,000, he cannot deduct his $5,500 IRA contribution. Amend irs return He must designate this contribution as a nondeductible contribution by reporting it on Form 8606. Amend irs return Repayment of reservist distributions. Amend irs return   Nondeductible contributions may include repayments of qualified reservist distributions. Amend irs return For more information, see Qualified reservist repayments under How Much Can Be Contributed, earlier. Amend irs return Form 8606. Amend irs return   To designate contributions as nondeductible, you must file Form 8606. Amend irs return (See the filled-in Forms 8606 in this chapter. Amend irs return )   You do not have to designate a contribution as nondeductible until you file your tax return. Amend irs return When you file, you can even designate otherwise deductible contributions as nondeductible contributions. Amend irs return   You must file Form 8606 to report nondeductible contributions even if you do not have to file a tax return for the year. Amend irs return    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. Amend irs return In those situations, a Form 8606 is completed for the year you take a distribution from that IRA. Amend irs return See Form 8606 under Distributions Fully or Partly Taxable, later. Amend irs return Failure to report nondeductible contributions. Amend irs return   If you do not report nondeductible contributions, all of the contributions to your traditional IRA will be treated like deductible contributions when withdrawn. Amend irs return All distributions from your IRA will be taxed unless you can show, with satisfactory evidence, that nondeductible contributions were made. Amend irs return Penalty for overstatement. Amend irs return   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. Amend irs return Penalty for failure to file Form 8606. Amend irs return   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. Amend irs return Tax on earnings on nondeductible contributions. Amend irs return   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. Amend irs return Cost basis. Amend irs return   You will have a cost basis in your traditional IRA if you made any nondeductible contributions. Amend irs return Your cost basis is the sum of the nondeductible contributions to your IRA minus any withdrawals or distributions of nondeductible contributions. Amend irs return    Commonly, distributions from your traditional IRAs will include both taxable and nontaxable (cost basis) amounts. Amend irs return See Are Distributions Taxable, later, for more information. Amend irs return Recordkeeping. Amend irs return There is a recordkeeping worksheet, Appendix A. Amend irs return Summary Record of Traditional IRA(s) for 2013 , that you can use to keep a record of deductible and nondeductible IRA contributions. Amend irs return 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. Amend irs return Example 1. Amend irs return For 2013, Tom and Betty file a joint return on Form 1040. Amend irs return They are both 39 years old. Amend irs return They are both employed and Tom is covered by his employer's retirement plan. Amend irs return Tom's salary is $59,000 and Betty's is $32,555. Amend irs return They each have a traditional IRA and their combined modified AGI, which includes $5,000 interest and dividend income, is $96,555. Amend irs return 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 . Amend irs return For 2013, Tom contributed $5,500 to his IRA and Betty contributed $5,500 to hers. Amend irs return Even though they file a joint return, they must use separate worksheets to figure the IRA deduction for each of them. Amend irs return Tom can take a deduction of only $5,080. Amend irs return He can choose to treat the $5,080 as either deductible or nondeductible contributions. Amend irs return He can either leave the $420 ($5,500 − $5,080) of nondeductible contributions in his IRA or withdraw them by April 15, 2014. Amend irs return He decides to treat the $5,080 as deductible contributions and leave the $420 of nondeductible contributions in his IRA. Amend irs return Using Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, Tom figures his deductible and nondeductible amounts as shown on Worksheet 1-2. Amend irs return Figuring Your Reduced IRA Deduction for 2013—Example 1 Illustrated. Amend irs return Betty figures her IRA deduction as follows. Amend irs return Betty can treat all or part of her contributions as either deductible or nondeductible. Amend irs return 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 . Amend irs return 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. Amend irs return Betty decides to treat her $5,500 IRA contributions as deductible. Amend irs return The IRA deductions of $5,080 and $5,500 on the joint return for Tom and Betty total $10,580. Amend irs return Example 2. Amend irs return For 2013, Ed and Sue file a joint return on Form 1040. Amend irs return They are both 39 years old. Amend irs return Ed is covered by his employer's retirement plan. Amend irs return Ed's salary is $45,000. Amend irs return Sue had no compensation for the year and did not contribute to an IRA. Amend irs return Sue is not covered by an employer plan. Amend irs return Ed contributed $5,500 to his traditional IRA and $5,500 to a traditional IRA for Sue (a Kay Bailey Hutchison Spousal IRA). Amend irs return 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. Amend irs return Because the combined modified AGI is $115,000 or more, Ed cannot deduct any of the contribution to his traditional IRA. Amend irs return He can either leave the $5,500 of nondeductible contributions in his IRA or withdraw them by April 15, 2014. Amend irs return Sue figures her IRA deduction as shown on Worksheet 1-2. Amend irs return Figuring Your Reduced IRA Deduction for 2013—Example 2 Illustrated. Amend irs return Worksheet 1-2. Amend irs return 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. Amend irs return ) Note. Amend irs return If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. Amend irs return IF you . Amend irs return . Amend irs return . Amend irs return AND your  filing status is . Amend irs return . Amend irs return . Amend irs return AND your modified AGI is over . Amend irs return . Amend irs return . Amend irs return THEN enter on  line 1 below . Amend irs return . Amend irs return . Amend irs return       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. Amend irs return Enter applicable amount from table above 1. Amend irs return   2. Amend irs return Enter your modified AGI (that of both spouses, if married filing jointly) 2. Amend irs return     Note. Amend irs return If line 2 is equal to or more than the amount on line 1, stop here. Amend irs return  Your IRA contributions are not deductible. Amend irs return See Nondeductible Contributions , earlier. Amend irs return     3. Amend irs return Subtract line 2 from line 1. Amend irs return 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. Amend irs return 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. Amend irs return   4. Amend irs return Multiply line 3 by the percentage below that applies to you. Amend irs return If the result is not a multiple of $10, round it to the next highest multiple of $10. Amend irs return (For example, $611. Amend irs return 40 is rounded to $620. Amend irs return ) However, if the result is less than $200, enter $200. Amend irs return         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. Amend irs return 5% (. Amend irs return 275) (by 32. Amend irs return 5% (. Amend irs return 325) if you are age 50 or older). Amend irs return All others, multiply line 3 by 55% (. Amend irs return 55) (by 65% (. Amend irs return 65) if you are age 50 or older). Amend irs return 4. Amend irs return   5. Amend irs return 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). Amend irs return 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. Amend irs return If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. Amend irs return   6. Amend irs return 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). Amend irs return If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. Amend irs return 6. Amend irs return   7. Amend irs return IRA deduction. Amend irs return Compare lines 4, 5, and 6. Amend irs return 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. Amend irs return If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. Amend irs return   8. Amend irs return Nondeductible contribution. Amend irs return Subtract line 7 from line 5 or 6, whichever is smaller. Amend irs return  Enter the result here and on line 1 of your Form 8606 8. Amend irs return   Worksheet 1-2. Amend irs return 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. Amend irs return ) Note. Amend irs return If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. Amend irs return IF you . Amend irs return . Amend irs return . Amend irs return AND your  filing status is . Amend irs return . Amend irs return . Amend irs return AND your modified AGI is over . Amend irs return . Amend irs return . Amend irs return THEN enter on  line 1 below . Amend irs return . Amend irs return . Amend irs return       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. Amend irs return Enter applicable amount from table above 1. Amend irs return 115,000 2. Amend irs return Enter your modified AGI (that of both spouses, if married filing jointly) 2. Amend irs return 96,555   Note. Amend irs return If line 2 is equal to or more than the amount on line 1, stop here. Amend irs return  Your IRA contributions are not deductible. Amend irs return See Nondeductible Contributions , earlier. Amend irs return     3. Amend irs return Subtract line 2 from line 1. Amend irs return 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. Amend irs return 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. Amend irs return 18,445 4. Amend irs return Multiply line 3 by the percentage below that applies to you. Amend irs return If the result is not a multiple of $10, round it to the next highest multiple of $10. Amend irs return (For example, $611. Amend irs return 40 is rounded to $620. Amend irs return ) However, if the result is less than $200, enter $200. Amend irs return         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. Amend irs return 5% (. Amend irs return 275) (by 32. Amend irs return 5% (. Amend irs return 325) if you are age 50 or older). Amend irs return All others, multiply line 3 by 55% (. Amend irs return 55) (by 65% (. Amend irs return 65) if you are age 50 or older). Amend irs return 4. Amend irs return 5,080 5. Amend irs return 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). Amend irs return 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. Amend irs return If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. Amend irs return 59,000 6. Amend irs return 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). Amend irs return If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. Amend irs return 6. Amend irs return 5,500 7. Amend irs return IRA deduction. Amend irs return Compare lines 4, 5, and 6. Amend irs return 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. Amend irs return If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. Amend irs return 5,080 8. Amend irs return Nondeductible contribution. Amend irs return Subtract line 7 from line 5 or 6, whichever is smaller. Amend irs return  Enter the result here and on line 1 of your Form 8606 8. Amend irs return 420 Worksheet 1-2. Amend irs return 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. Amend irs return ) Note. Amend irs return If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. Amend irs return IF you . Amend irs return . Amend irs return . Amend irs return AND your  filing status is . Amend irs return . Amend irs return . Amend irs return AND your modified AGI is over . Amend irs return . Amend irs return . Amend irs return THEN enter on  line 1 below . Amend irs return . Amend irs return . Amend irs return       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. Amend irs return Enter applicable amount from table above 1. Amend irs return 188,000 2. Amend irs return Enter your modified AGI (that of both spouses, if married filing jointly) 2. Amend irs return 180,555   Note. Amend irs return If line 2 is equal to or more than the amount on line 1, stop here. Amend irs return  Your IRA contributions are not deductible. Amend irs return See Nondeductible Contributions , earlier. Amend irs return     3. Amend irs return Subtract line 2 from line 1. Amend irs return 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. Amend irs return 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. Amend irs return 7,445 4. Amend irs return Multiply line 3 by the percentage below that applies to you. Amend irs return If the result is not a multiple of $10, round it to the next highest multiple of $10. Amend irs return (For example, $611. Amend irs return 40 is rounded to $620. Amend irs return ) However, if the result is less than $200, enter $200. Amend irs return         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. Amend irs return 5% (. Amend irs return 275) (by 32. Amend irs return 5% (. Amend irs return 325) if you are age 50 or older). Amend irs return All others, multiply line 3 by 55% (. Amend irs return 55) (by 65% (. Amend irs return 65) if you are age 50 or older). Amend irs return 4. Amend irs return 4,100 5. Amend irs return 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). Amend irs return 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. Amend irs return If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. Amend irs return 39,500 6. Amend irs return 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). Amend irs return If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. Amend irs return 6. Amend irs return 5,500 7. Amend irs return IRA deduction. Amend irs return Compare lines 4, 5, and 6. Amend irs return 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. Amend irs return If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. Amend irs return 4,100 8. Amend irs return Nondeductible contribution. Amend irs return Subtract line 7 from line 5 or 6, whichever is smaller. Amend irs return  Enter the result here and on line 1 of your Form 8606 8. Amend irs return 1,400 What if You Inherit an IRA? If you inherit a traditional IRA, you are called a beneficiary. Amend irs return A beneficiary can be any person or entity the owner chooses to receive the benefits of the IRA after he or she dies. Amend irs return Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive. Amend irs return Inherited from spouse. Amend irs return   If you inherit a traditional IRA from your spouse, you generally have the following three choices. Amend irs return You can: Treat it as your own IRA by designating yourself as the account owner. Amend irs return 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