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Amended 1040ez

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Amended 1040ez

Amended 1040ez 7. Amended 1040ez   Figuring Gross Profit Table of Contents Introduction Items To Check Testing Gross Profit AccuracyExample. Amended 1040ez Additions to Gross Profit Introduction After you have figured the gross receipts from your business (chapter 5) and the cost of goods sold (chapter 6), you are ready to figure your gross profit. Amended 1040ez You must determine gross profit before you can deduct any business expenses. Amended 1040ez These expenses are discussed in chapter 8. Amended 1040ez If you are filing Schedule C-EZ, your gross profit is your gross receipts plus certain other amounts, explained later under Additions to Gross Profit. Amended 1040ez Businesses that sell products. Amended 1040ez   If you are filing Schedule C, figure your gross profit by first figuring your net receipts. Amended 1040ez Figure net receipts (line 3) on Schedule C by subtracting any returns and allowances (line 2) from gross receipts (line 1). Amended 1040ez Returns and allowances include cash or credit refunds you make to customers, rebates, and other allowances off the actual sales price. Amended 1040ez   Next, subtract the cost of goods sold (line 4) from net receipts (line 3). Amended 1040ez The result is the gross profit from your business. Amended 1040ez Businesses that sell services. Amended 1040ez   You do not have to figure the cost of goods sold if the sale of merchandise is not an income-producing factor for your business. Amended 1040ez Your gross profit is the same as your net receipts (gross receipts minus any refunds, rebates, or other allowances). Amended 1040ez Most professions and businesses that sell services rather than products can figure gross profit directly from net receipts in this way. Amended 1040ez Illustration. Amended 1040ez   This illustration of the gross profit section of the income statement of a retail business shows how gross profit is figured. Amended 1040ez Income Statement Year Ended December 31, 2013 Gross receipts $400,000 Minus: Returns and allowances 14,940 Net receipts $385,060 Minus: Cost of goods sold 288,140 Gross profit $96,920   The cost of goods sold for this business is figured as follows: Inventory at beginning of year $37,845 Plus: Purchases $285,900   Minus: Items withdrawn for personal use 2,650 283,250 Goods available for sale $321,095 Minus: Inventory at end of year 32,955 Cost of goods sold $288,140 Items To Check Consider the following items before figuring your gross profit. Amended 1040ez Gross receipts. Amended 1040ez   At the end of each business day, make sure your records balance with your actual cash and credit receipts for the day. Amended 1040ez You may find it helpful to use cash registers to keep track of receipts. Amended 1040ez You should also use a proper invoicing system and keep a separate bank account for your business. Amended 1040ez Sales tax collected. Amended 1040ez   Check to make sure your records show the correct sales tax collected. Amended 1040ez   If you collect state and local sales taxes imposed on you as the seller of goods or services from the buyer, you must include the amount collected in gross receipts. Amended 1040ez   If you are required to collect state and local taxes imposed on the buyer and turn them over to state or local governments, you generally do not include these amounts in income. Amended 1040ez Inventory at beginning of year. Amended 1040ez   Compare this figure with last year's ending inventory. Amended 1040ez The two amounts should usually be the same. Amended 1040ez Purchases. Amended 1040ez   If you take any inventory items for your personal use (use them yourself, provide them to your family, or give them as personal gifts, etc. Amended 1040ez ) be sure to remove them from the cost of goods sold. Amended 1040ez For details on how to adjust cost of goods sold, see Merchandise withdrawn from sale in chapter 6. Amended 1040ez Inventory at end of year. Amended 1040ez   Check to make sure your procedures for taking inventory are adequate. Amended 1040ez These procedures should ensure all items have been included in inventory and proper pricing techniques have been used. Amended 1040ez   Use inventory forms and adding machine tapes as the only evidence for your inventory. Amended 1040ez Inventory forms are available at office supply stores. Amended 1040ez These forms have columns for recording the description, quantity, unit price, and value of each inventory item. Amended 1040ez Each page has space to record who made the physical count, who priced the items, who made the extensions, and who proofread the calculations. Amended 1040ez These forms will help satisfy you that the total inventory is accurate. Amended 1040ez They will also provide you with a permanent record to support its validity. Amended 1040ez   Inventories are discussed in chapter 2. Amended 1040ez Testing Gross Profit Accuracy If you are in a retail or wholesale business, you can check the accuracy of your gross profit figure. Amended 1040ez First, divide gross profit by net receipts. Amended 1040ez The resulting percentage measures the average spread between the merchandise cost of goods sold and the selling price. Amended 1040ez Next, compare this percentage to your markup policy. Amended 1040ez Little or no difference between these two percentages shows that your gross profit figure is accurate. Amended 1040ez A large difference between these percentages may show that you did not accurately figure sales, purchases, inventory, or other items of cost. Amended 1040ez You should determine the reason for the difference. Amended 1040ez Example. Amended 1040ez   Joe Able operates a retail business. Amended 1040ez On the average, he marks up his merchandise so that he will realize a gross profit of 331/3% on its sales. Amended 1040ez The net receipts (gross receipts minus returns and allowances) shown on his income statement is $300,000. Amended 1040ez His cost of goods sold is $200,000. Amended 1040ez This results in a gross profit of $100,000 ($300,000 − $200,000). Amended 1040ez To test the accuracy of this year's results, Joe divides gross profit ($100,000) by net receipts ($300,000). Amended 1040ez The resulting 331/3% confirms his markup percentage of 331/3%. Amended 1040ez Additions to Gross Profit If your business has income from a source other than its regular business operations, enter the income on line 6 of Schedule C and add it to gross profit. Amended 1040ez The result is gross business income. Amended 1040ez If you use Schedule C-EZ, include the income on line 1 of the schedule. Amended 1040ez Some examples include income from an interest-bearing checking account, income from scrap sales, income from certain fuel tax credits and refunds, and amounts recovered from bad debts. Amended 1040ez Prev  Up  Next   Home   More Online Publications
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Consumer Protection Offices

City, county, regional, and state consumer offices offer a variety of important services. They might mediate complaints, conduct investigations, prosecute offenders of consumer laws, license and regulate professional service providers, provide educational materials and advocate for consumer rights. To save time, call before sending a written complaint. Ask if the office handles the type of complaint you have and if complaint forms are provided.

State Consumer Protection Offices

Iowa Office of the Attorney General

Website: Iowa Office of the Attorney General

Address: Iowa Office of the Attorney General
Consumer Protection Division
1305 E. Walnut St.
Des Moines, IA 50319

Phone Number: 515-281-5926

Toll-free: 1-888-777-4590 (IA)

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Banking Authorities

The officials listed in this section regulate and supervise state-chartered banks. Many of them handle or refer problems and complaints about other types of financial institutions as well. Some also answer general questions about banking and consumer credit. If you are dealing with a federally chartered bank, check Federal Agencies.

Division of Banking

Website: Division of Banking

Address: Division of Banking
200 E. Grand Ave., Suite 300
Des Moines, IA 50309-1827

Phone Number: 515-281-4014

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Insurance Regulators

Each state has its own laws and regulations for each type of insurance. The officials listed in this section enforce these laws. Many of these offices can also provide you with information to help you make informed insurance buying decisions.

Division of Insurance

Website: Division of Insurance

Address: Division of Insurance
330 Maple St.
Des Moines, IA 50319-0065

Phone Number: 515-281-5705

Toll-free: 1-877-955-1212 (IA)

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Securities Administrators

Each state has its own laws and regulations for securities brokers and securities - including stocks, mutual funds, commodities, real estate, etc. The officials and agencies listed in this section enforce these laws and regulations. Many of these offices can also provide information to help you make informed investment decisions.

Securities Bureau

Website: Securities Bureau

Address: Securities Bureau
340 Maple St.
Des Moines, IA 50319

Phone Number: 515-281-5705

Toll-free: 1-877-955-1212 (IA)

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Utility Commissions

State Utility Commissions regulate services and rates for gas, electricity and telephones within your state. In some states, the utility commissions regulate other services such as water, transportation, and the moving of household goods. Many utility commissions handle consumer complaints. Sometimes, if a number of complaints are received about the same utility matter, they will conduct investigations.

Utilities Board

Website: Utilities Board

Address: Utilities Board
Customer Service Group
1375 E. Court Ave., Room 69
Des Moines, IA 50319-0069

Phone Number: 515-725-7321

Toll-free: 1-877-565-4450 (IA)

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The Amended 1040ez

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