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H And R Block Free Tax Preparation

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H And R Block Free Tax Preparation

H and r block free tax preparation Publication 514 - Introductory Material Table of Contents Reminders IntroductionOrdering forms and publications. H and r block free tax preparation Tax questions. H and r block free tax preparation Useful Items - You may want to see: Reminders Future developments. H and r block free tax preparation  For the latest information about developments related to Pub. H and r block free tax preparation 514, such as legislation enacted after it was published, go to www. H and r block free tax preparation irs. H and r block free tax preparation gov/pub514. H and r block free tax preparation Alternative minimum tax. H and r block free tax preparation  In addition to your regular income tax, you may be liable for the alternative minimum tax. H and r block free tax preparation A foreign tax credit may be allowed in figuring this tax. H and r block free tax preparation See the instructions for Form 6251, Alternative Minimum Tax—Individuals, for a discussion of the alternative minimum tax foreign tax credit. H and r block free tax preparation Change of address. H and r block free tax preparation  If your address changes from the address shown on your last return, use Form 8822, Change of Address, to notify the Internal Revenue Service. H and r block free tax preparation Photographs of missing children. H and r block free tax preparation  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. H and r block free tax preparation Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. H and r block free tax preparation You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. H and r block free tax preparation Introduction If you paid or accrued foreign taxes to a foreign country on foreign source income and are subject to U. H and r block free tax preparation S. H and r block free tax preparation tax on the same income, you may be able to take either a credit or an itemized deduction for those taxes. H and r block free tax preparation Taken as a deduction, foreign income taxes reduce your U. H and r block free tax preparation S. H and r block free tax preparation taxable income. H and r block free tax preparation Taken as a credit, foreign income taxes reduce your U. H and r block free tax preparation S. H and r block free tax preparation tax liability. H and r block free tax preparation In most cases, it is to your advantage to take foreign income taxes as a tax credit. H and r block free tax preparation The major scope of this publication is the foreign tax credit. H and r block free tax preparation The publication discusses: How to choose to take the credit or the deduction, Who can take the credit, What foreign taxes qualify for the credit, How to figure the credit, and How to carry over unused foreign taxes to other tax years. H and r block free tax preparation Unless you qualify for exemption from the foreign tax credit limit, you claim the credit by filing Form 1116 with your U. H and r block free tax preparation S. H and r block free tax preparation income tax return. H and r block free tax preparation Two examples with filled-in Forms 1116 are provided at the end of this publication. H and r block free tax preparation Comments and suggestions. H and r block free tax preparation   We welcome your comments about this publication and your suggestions for future editions. H and r block free tax preparation   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. H and r block free tax preparation NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. H and r block free tax preparation Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. H and r block free tax preparation   You can send your comments from www. H and r block free tax preparation irs. H and r block free tax preparation gov/formspubs/. H and r block free tax preparation Click on “More Information” and then on “Comment on Tax Forms and Publications”. H and r block free tax preparation   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. H and r block free tax preparation Ordering forms and publications. H and r block free tax preparation   Visit www. H and r block free tax preparation irs. H and r block free tax preparation gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. H and r block free tax preparation Internal Revenue Service 1201 N. H and r block free tax preparation Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. H and r block free tax preparation   If you have a tax question, check the information available on IRS. H and r block free tax preparation gov or call 1-800-829-1040. H and r block free tax preparation We cannot answer tax questions sent to either of the above addresses. H and r block free tax preparation Useful Items - You may want to see: Publication 54 Tax Guide for U. H and r block free tax preparation S. H and r block free tax preparation Citizens and Resident Aliens Abroad 519 U. H and r block free tax preparation S. H and r block free tax preparation Tax Guide for Aliens 570 Tax Guide for Individuals With Income From U. H and r block free tax preparation S. H and r block free tax preparation Possessions Form (and Instructions) 1116 Foreign Tax Credit See How To Get Tax Help near the end of this publication for information about getting these publications and this form. H and r block free tax preparation Prev  Up  Next   Home   More Online Publications
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The H And R Block Free Tax Preparation

H and r block free tax preparation 2. H and r block free tax preparation   Roth IRAs Table of Contents What's New for 2013 What's New for 2014 Reminders Introduction What Is a Roth IRA? When Can a Roth IRA Be Opened? Can You Contribute to a Roth IRA?How Much Can Be Contributed? When Can You Make Contributions? What if You Contribute Too Much? Can You Move Amounts Into a Roth IRA?Conversions Rollover From Employer's Plan Into a Roth IRA Military Death Gratuities and Servicemembers' Group Life Insurance (SGLI) Payments Rollover From a Roth IRA Rollover of Exxon Valdez Settlement Income Rollover of Airline Payments Are Distributions Taxable?What Are Qualified Distributions? Additional Tax on Early Distributions Ordering Rules for Distributions How Do You Figure the Taxable Part? Must You Withdraw or Use Assets?Minimum distributions. H and r block free tax preparation Recognizing Losses on Investments Distributions After Owner's Death What's New for 2013 Roth IRA contribution limit. H and r block free tax preparation  If contributions on your behalf are made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $5,500, or Your taxable compensation for the year. H and r block free tax preparation If you were age 50 or older before 2014 and contributions on your behalf were made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $6,500, or Your taxable compensation for the year. H and r block free tax preparation However, if your modified adjusted gross income (AGI) is above a certain amount, your contribution limit may be reduced. H and r block free tax preparation For more information, see How Much Can Be Contributed? under Can You Contribute to a Roth IRA? in this chapter. H and r block free tax preparation Modified AGI limit for Roth IRA contributions increased. H and r block free tax preparation  For 2013, your Roth IRA contribution limit is reduced (phased out) in the following situations. H and r block free tax preparation Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $178,000. H and r block free tax preparation You cannot make a Roth IRA contribution if your modified AGI is $188,000 or more. H and r block free tax preparation Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2013 and your modified AGI is at least $112,000. H and r block free tax preparation You cannot make a Roth IRA contribution if your modified AGI is $127,000 or more. H and r block free tax preparation Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. H and r block free tax preparation You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. H and r block free tax preparation See Can You Contribute to a Roth IRA? in this chapter. H and r block free tax preparation Net Investment Income Tax. H and r block free tax preparation  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). H and r block free tax preparation However, these distributions are taken into account when determining the modified adjusted gross income threshold. H and r block free tax preparation Distributions from a nonqualified retirement plan are included in net investment income. H and r block free tax preparation See Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions for more information. H and r block free tax preparation What's New for 2014 Modified AGI limit for Roth IRA contributions increased. H and r block free tax preparation  For 2014, your Roth IRA contribution limit is reduced (phased out) in the following situations. H and r block free tax preparation Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $181,000. H and r block free tax preparation You cannot make a Roth IRA contribution if your modified AGI is $191,000 or more. H and r block free tax preparation Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2014 and your modified AGI is at least $114,000. H and r block free tax preparation You cannot make a Roth IRA contribution if your modified AGI is $129,000 or more. H and r block free tax preparation Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. H and r block free tax preparation You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. H and r block free tax preparation Reminders Deemed IRAs. H and r block free tax preparation  For plan years beginning after 2002, a qualified employer plan (retirement plan) can maintain a separate account or annuity under the plan (a deemed IRA) to receive voluntary employee contributions. H and r block free tax preparation If the separate account or annuity otherwise meets the requirements of an IRA, it will be subject only to IRA rules. H and r block free tax preparation An employee's account can be treated as a traditional IRA or a Roth IRA. H and r block free tax preparation For this purpose, a “qualified employer plan” includes: A qualified pension, profit-sharing, or stock bonus plan (section 401(a) plan), A qualified employee annuity plan (section 403(a) plan), A tax-sheltered annuity plan (section 403(b) plan), and A deferred compensation plan (section 457 plan) maintained by a state, a political subdivision of a state, or an agency or instrumentality of a state or political subdivision of a state. H and r block free tax preparation Designated Roth accounts. H and r block free tax preparation  Designated Roth accounts are separate accounts under 401(k), 403(b), or 457(b) plans that accept elective deferrals that are referred to as Roth contributions. H and r block free tax preparation These elective deferrals are included in your income, but qualified distributions from these accounts are not included in your income. H and r block free tax preparation Designated Roth accounts are not IRAs and should not be confused with Roth IRAs. H and r block free tax preparation Contributions, up to their respective limits, can be made to Roth IRAs and designated Roth accounts according to your eligibility to participate. H and r block free tax preparation A contribution to one does not impact your eligibility to contribute to the other. H and r block free tax preparation See Publication 575, for more information on designated Roth accounts. H and r block free tax preparation Introduction Regardless of your age, you may be able to establish and make nondeductible contributions to an individual retirement plan called a Roth IRA. H and r block free tax preparation Contributions not reported. H and r block free tax preparation   You do not report Roth IRA contributions on your return. H and r block free tax preparation What Is a Roth IRA? A Roth IRA is an individual retirement plan that, except as explained in this chapter, is subject to the rules that apply to a traditional IRA (defined next). H and r block free tax preparation It can be either an account or an annuity. H and r block free tax preparation Individual retirement accounts and annuities are described in chapter 1 under How Can a Traditional IRA Be Opened. H and r block free tax preparation To be a Roth IRA, the account or annuity must be designated as a Roth IRA when it is opened. H and r block free tax preparation A deemed IRA can be a Roth IRA, but neither a SEP IRA nor a SIMPLE IRA can be designated as a Roth IRA. H and r block free tax preparation Unlike a traditional IRA, you cannot deduct contributions to a Roth IRA. H and r block free tax preparation But, if you satisfy the requirements, qualified distributions (discussed later) are tax free. H and r block free tax preparation Contributions can be made to your Roth IRA after you reach age 70½ and you can leave amounts in your Roth IRA as long as you live. H and r block free tax preparation Traditional IRA. H and r block free tax preparation   A traditional IRA is any IRA that is not a Roth IRA or SIMPLE IRA. H and r block free tax preparation Traditional IRAs are discussed in chapter 1. H and r block free tax preparation When Can a Roth IRA Be Opened? You can open a Roth IRA at any time. H and r block free tax preparation However, the time for making contributions for any year is limited. H and r block free tax preparation See When Can You Make Contributions , later under Can You Contribute to a Roth IRA. H and r block free tax preparation Can You Contribute to a Roth IRA? Generally, you can contribute to a Roth IRA if you have taxable compensation (defined later) and your modified AGI (defined later) is less than: $188,000 for married filing jointly or qualifying widow(er), $127,000 for single, head of household, or married filing separately and you did not live with your spouse at any time during the year, and $10,000 for married filing separately and you lived with your spouse at any time during the year. H and r block free tax preparation You may be able to claim a credit for contributions to your Roth IRA. H and r block free tax preparation For more information, see chapter 4. H and r block free tax preparation Is there an age limit for contributions?   Contributions can be made to your Roth IRA regardless of your age. H and r block free tax preparation Can you contribute to a Roth IRA for your spouse?   You can contribute to a Roth IRA for your spouse provided the contributions satisfy the Kay Bailey Hutchison Spousal IRA limit discussed in chapter 1 under How Much Can Be Contributed, you file jointly, and your modified AGI is less than $188,000. H and r block free tax preparation Compensation. H and r block free tax preparation   Compensation includes wages, salaries, tips, professional fees, bonuses, and other amounts received for providing personal services. H and r block free tax preparation It also includes commissions, self-employment income, nontaxable combat pay, military differential pay, and taxable alimony and separate maintenance payments. H and r block free tax preparation For more information, see What Is Compensation? under Who Can Open a Traditional IRA? in chapter 1. H and r block free tax preparation Modified AGI. H and r block free tax preparation   Your modified AGI for Roth IRA purposes is your adjusted gross income (AGI) as shown on your return with some adjustments. H and r block free tax preparation Use Worksheet 2-1 , later, to determine your modified AGI. H and r block free tax preparation    Do not subtract conversion income when figuring your other AGI-based phaseouts and taxable income, such as your deduction for medical and dental expenses. H and r block free tax preparation Subtract them from AGI only for the purpose of figuring your modified AGI for Roth IRA purposes. H and r block free tax preparation How Much Can Be Contributed? The contribution limit for Roth IRAs generally depends on whether contributions are made only to Roth IRAs or to both traditional IRAs and Roth IRAs. H and r block free tax preparation Worksheet 2-1. H and r block free tax preparation Modified Adjusted Gross Income for Roth IRA Purposes Use this worksheet to figure your modified adjusted gross income for Roth IRA purposes. H and r block free tax preparation 1. H and r block free tax preparation Enter your adjusted gross income from Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37 1. H and r block free tax preparation   2. H and r block free tax preparation Enter any income resulting from the conversion of an IRA (other than a Roth IRA) to a Roth IRA (included on Form 1040, line 15b, Form 1040A, line 11b, or Form 1040NR, line 16b) and a rollover from a qualified retirement plan to a Roth IRA (included on Form 1040, line 16b, Form 1040A, line 12b, or Form 1040NR, line 17b) 2. H and r block free tax preparation   3. H and r block free tax preparation Subtract line 2 from line 1 3. H and r block free tax preparation   4. H and r block free tax preparation Enter any traditional IRA deduction from Form 1040, line 32; Form 1040A, line 17; or Form 1040NR, line 32 4. H and r block free tax preparation   5. H and r block free tax preparation Enter any student loan interest deduction from Form 1040, line 33; Form 1040A, line 18; or Form 1040NR, line 33 5. H and r block free tax preparation   6. H and r block free tax preparation Enter any tuition and fees deduction from Form 1040, line 34, or Form 1040A, line 19 6. H and r block free tax preparation   7. H and r block free tax preparation Enter any domestic production activities deduction from Form 1040, line 35, or Form 1040NR, line 34 7. H and r block free tax preparation   8. H and r block free tax preparation Enter any foreign earned income exclusion and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18 8. H and r block free tax preparation   9. H and r block free tax preparation Enter any foreign housing deduction from Form 2555, line 50 9. H and r block free tax preparation   10. H and r block free tax preparation Enter any excludable qualified savings bond interest from Form 8815, line 14 10. H and r block free tax preparation   11. H and r block free tax preparation Enter any excluded employer-provided adoption benefits from Form 8839, line 28 11. H and r block free tax preparation   12. H and r block free tax preparation Add the amounts on lines 3 through 11 12. H and r block free tax preparation   13. H and r block free tax preparation Enter: $188,000 if married filing jointly or qualifying widow(er), $10,000 if married filing separately and you lived with your spouse at any time during the year, or $127,000 for all others 13. H and r block free tax preparation   Is the amount on line 12 more than the amount on line 13? If yes, see the note below. H and r block free tax preparation  If no, the amount on line 12 is your modified adjusted gross income for Roth IRA purposes. H and r block free tax preparation       Note. H and r block free tax preparation If the amount on line 12 is more than the amount on line 13 and you have other income or loss items, such as social security income or passive activity losses, that are subject to AGI-based phaseouts, you can refigure your AGI solely for the purpose of figuring your modified AGI for Roth IRA purposes. H and r block free tax preparation (If you receive social security benefits, use Worksheet 1 in Appendix B to refigure your AGI. H and r block free tax preparation ) Then go to line 3 above in this Worksheet 2-1 to refigure your modified AGI. H and r block free tax preparation If you do not have other income or loss items subject to AGI-based phaseouts, your modified adjusted gross income for Roth IRA purposes is the amount on line 12 above. H and r block free tax preparation Roth IRAs only. H and r block free tax preparation   If contributions are made only to Roth IRAs, your contribution limit generally is the lesser of: $5,500 ($6,500 if you are age 50 or older), or Your taxable compensation. H and r block free tax preparation   However, if your modified AGI is above a certain amount, your contribution limit may be reduced, as explained later under Contribution limit reduced . H and r block free tax preparation Roth IRAs and traditional IRAs. H and r block free tax preparation   If contributions are made to both Roth IRAs and traditional IRAs established for your benefit, your contribution limit for Roth IRAs generally is the same as your limit would be if contributions were made only to Roth IRAs, but then reduced by all contributions for the year to all IRAs other than Roth IRAs. H and r block free tax preparation Employer contributions under a SEP or SIMPLE IRA plan do not affect this limit. H and r block free tax preparation   This means that your contribution limit is the lesser of: $5,500 ($6,500 if you are age 50 or older) minus all contributions (other than employer contributions under a SEP or SIMPLE IRA plan) for the year to all IRAs other than Roth IRAs, or Your taxable compensation minus all contributions (other than employer contributions under a SEP or SIMPLE IRA plan) for the year to all IRAs other than Roth IRAs. H and r block free tax preparation   However, if your modified AGI is above a certain amount, your contribution limit may be reduced, as explained below under Contribution limit reduced . H and r block free tax preparation   Simplified employee pensions (SEPs) are discussed in Publication 560. H and r block free tax preparation Savings incentive match plans for employees (SIMPLEs) are discussed in chapter 3. H and r block free tax preparation Repayment of reservist distributions. H and r block free tax preparation   You can repay qualified reservist distributions even if the repayments would cause your total contributions to the Roth IRA to be more than the general limit on contributions. H and r block free tax preparation However, the total repayments cannot be more than the amount of your distribution. H and r block free tax preparation Note. H and r block free tax preparation If you make repayments of qualified reservist distributions to a Roth IRA, increase your basis in the Roth IRA by the amount of the repayment. H and r block free tax preparation For more information, see Qualified reservist repayments under How Much Can Be Contributed? in chapter 1. H and r block free tax preparation Contribution limit reduced. H and r block free tax preparation   If your modified AGI is above a certain amount, your contribution limit is gradually reduced. H and r block free tax preparation Use Table 2-1, later, to determine if this reduction applies to you. H and r block free tax preparation Table 2-1. H and r block free tax preparation Effect of Modified AGI on Roth IRA Contribution This table shows whether your contribution to a Roth IRA is affected by the amount of your modified adjusted gross income (modified AGI). H and r block free tax preparation IF you have taxable compensation and your filing status is . H and r block free tax preparation . H and r block free tax preparation . H and r block free tax preparation AND your modified AGI is . H and r block free tax preparation . H and r block free tax preparation . H and r block free tax preparation THEN . H and r block free tax preparation . H and r block free tax preparation . H and r block free tax preparation married filing jointly or  qualifying widow(er) less than $178,000 you can contribute up to $5,500 ($6,500 if you are age 50 or older) as explained under How Much Can Be Contributed . H and r block free tax preparation at least $178,000 but less than $188,000 the amount you can contribute is reduced as explained under Contribution limit reduced . H and r block free tax preparation $188,000 or more you cannot contribute to a Roth IRA. H and r block free tax preparation married filing separately and you lived with your spouse at any time during the year zero (-0-) you can contribute up to $5,500 ($6,500 if you are age 50 or older) as explained under How Much Can Be Contributed . H and r block free tax preparation more than zero (-0-) but less than $10,000 the amount you can contribute is reduced as explained under Contribution limit reduced . H and r block free tax preparation $10,000 or more you cannot contribute to a Roth IRA. H and r block free tax preparation single, head of household,  or married filing separately and you did not live with your spouse at any time during the year less than $112,000 you can contribute up to $5,500 ($6,500 if you are age 50 or older) as explained under How Much Can Be Contributed . H and r block free tax preparation at least $112,000 but less than $127,000 the amount you can contribute is reduced as explained under Contribution limit reduced . H and r block free tax preparation $127,000 or more you cannot contribute to a Roth IRA. H and r block free tax preparation Figuring the reduction. H and r block free tax preparation   If the amount you can contribute must be reduced, use Worksheet 2-2, later, to figure your reduced contribution limit. H and r block free tax preparation Worksheet 2-2. H and r block free tax preparation Determining Your Reduced Roth IRA Contribution Limit Before using this worksheet, check Table 2-1, earlier, to determine whether or not your Roth IRA contribution limit is reduced. H and r block free tax preparation If it is, use this worksheet to determine how much it is reduced. H and r block free tax preparation 1. H and r block free tax preparation Enter your modified AGI for Roth IRA purposes (Worksheet 2-1, line 12) 1. H and r block free tax preparation   2. H and r block free tax preparation Enter: $178,000 if filing a joint return or qualifying widow(er), $-0- if married filing a separate return and you lived with your spouse at any time in 2013, or $112,000 for all others 2. H and r block free tax preparation   3. H and r block free tax preparation Subtract line 2 from line 1 3. H and r block free tax preparation   4. H and r block free tax preparation Enter: $10,000 if filing a joint return or qualifying widow(er) or married filing a separate return and you lived with your spouse at any time during the year, or $15,000 for all others 4. H and r block free tax preparation   5. H and r block free tax preparation Divide line 3 by line 4 and enter the result as a decimal (rounded to at least three places). H and r block free tax preparation If the result is 1. H and r block free tax preparation 000 or more, enter 1. H and r block free tax preparation 000 5. H and r block free tax preparation   6. H and r block free tax preparation Enter the lesser of: $5,500 ($6,500 if you are age 50 or older), or Your taxable compensation 6. H and r block free tax preparation   7. H and r block free tax preparation Multiply line 5 by line 6 7. H and r block free tax preparation   8. H and r block free tax preparation Subtract line 7 from line 6. H and r block free tax preparation Round the result up to the nearest $10. H and r block free tax preparation If the result is less than $200, enter $200 8. H and r block free tax preparation   9. H and r block free tax preparation Enter contributions for the year to other IRAs 9. H and r block free tax preparation   10. H and r block free tax preparation Subtract line 9 from line 6 10. H and r block free tax preparation   11. H and r block free tax preparation Enter the lesser of line 8 or line 10. H and r block free tax preparation This is your reduced Roth IRA contribution limit 11. H and r block free tax preparation      Round your reduced contribution limit up to the nearest $10. H and r block free tax preparation If your reduced contribution limit is more than $0, but less than $200, increase the limit to $200. H and r block free tax preparation Example. H and r block free tax preparation You are a 45-year-old, single individual with taxable compensation of $113,000. H and r block free tax preparation You want to make the maximum allowable contribution to your Roth IRA for 2013. H and r block free tax preparation Your modified AGI for 2013 is $113,000. H and r block free tax preparation You have not contributed to any traditional IRA, so the maximum contribution limit before the modified AGI reduction is $5,500. H and r block free tax preparation You figure your reduced Roth IRA contribution of $5,140 as shown on Worksheet 2-2. H and r block free tax preparation Example—Illustrated, later. H and r block free tax preparation   Worksheet 2-2. H and r block free tax preparation Example—Illustrated Before using this worksheet, check Table 2-1, earlier, to determine whether or not your Roth IRA contribution limit is reduced. H and r block free tax preparation If it is, use this worksheet to determine how much it is reduced. H and r block free tax preparation 1. H and r block free tax preparation Enter your modified AGI for Roth IRA purposes (Worksheet 2-1, line 12) 1. H and r block free tax preparation 113,000 2. H and r block free tax preparation Enter: $178,000 if filing a joint return or qualifying widow(er), $-0- if married filing a separate return and you lived with your spouse at any time in 2013, or $112,000 for all others 2. H and r block free tax preparation 112,000 3. H and r block free tax preparation Subtract line 2 from line 1 3. H and r block free tax preparation 1,000 4. H and r block free tax preparation Enter: $10,000 if filing a joint return or qualifying widow(er) or married filing a separate return and you lived with your spouse at any time during the year, or $15,000 for all others 4. H and r block free tax preparation 15,000 5. H and r block free tax preparation Divide line 3 by line 4 and enter the result as a decimal (rounded to at least three places). H and r block free tax preparation If the result is 1. H and r block free tax preparation 000 or more, enter 1. H and r block free tax preparation 000 5. H and r block free tax preparation . H and r block free tax preparation 067 6. H and r block free tax preparation Enter the lesser of: $5,500 ($6,500 if you are age 50 or older), or Your taxable compensation 6. H and r block free tax preparation 5,500 7. H and r block free tax preparation Multiply line 5 by line 6 7. H and r block free tax preparation 369 8. H and r block free tax preparation Subtract line 7 from line 6. H and r block free tax preparation Round the result up to the nearest $10. H and r block free tax preparation If the result is less than $200, enter $200 8. H and r block free tax preparation 5,140 9. H and r block free tax preparation Enter contributions for the year to other IRAs 9. H and r block free tax preparation 0 10. H and r block free tax preparation Subtract line 9 from line 6 10. H and r block free tax preparation 5,500 11. H and r block free tax preparation Enter the lesser of line 8 or line 10. H and r block free tax preparation This is your reduced Roth IRA contribution limit 11. H and r block free tax preparation 5,140 When Can You Make Contributions? You can make contributions to a Roth IRA for a year at any time during the year or by the due date of your return for that year (not including extensions). H and r block free tax preparation You can make contributions for 2013 by the due date (not including extensions) for filing your 2013 tax return. H and r block free tax preparation This means that most people can make contributions for 2013 by April 15, 2014. H and r block free tax preparation What if You Contribute Too Much? A 6% excise tax applies to any excess contribution to a Roth IRA. H and r block free tax preparation Excess contributions. H and r block free tax preparation   These are the contributions to your Roth IRAs for a year that equal the total of: Amounts contributed for the tax year to your Roth IRAs (other than amounts properly and timely rolled over from a Roth IRA or properly converted from a traditional IRA or rolled over from a qualified retirement plan, as described later) that are more than your contribution limit for the year (explained earlier under How Much Can Be Contributed? ), plus Any excess contributions for the preceding year, reduced by the total of: Any distributions out of your Roth IRAs for the year, plus Your contribution limit for the year minus your contributions to all your IRAs for the year. H and r block free tax preparation Withdrawal of excess contributions. H and r block free tax preparation   For purposes of determining excess contributions, any contribution that is withdrawn on or before the due date (including extensions) for filing your tax return for the year is treated as an amount not contributed. H and r block free tax preparation This treatment only applies if any earnings on the contributions are also withdrawn. H and r block free tax preparation The earnings are considered earned and received in the year the excess contribution was made. H and r block free tax preparation   If you timely filed your 2013 tax return without withdrawing a contribution that you made in 2013, you can still have the contribution returned to you within 6 months of the due date of your 2013 tax return, excluding extensions. H and r block free tax preparation If you do, file an amended return with “Filed pursuant to section 301. H and r block free tax preparation 9100-2” written at the top. H and r block free tax preparation Report any related earnings on the amended return and include an explanation of the withdrawal. H and r block free tax preparation Make any other necessary changes on the amended return. H and r block free tax preparation Applying excess contributions. H and r block free tax preparation    If contributions to your Roth 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. H and r block free tax preparation Can You Move Amounts Into a Roth IRA? You may be able to convert amounts from either a traditional, SEP, or SIMPLE IRA into a Roth IRA. H and r block free tax preparation You may be able to roll over amounts from a qualified retirement plan to a Roth IRA. H and r block free tax preparation You may be able to recharacterize contributions made to one IRA as having been made directly to a different IRA. H and r block free tax preparation You can roll amounts over from a designated Roth account or from one Roth IRA to another Roth IRA. H and r block free tax preparation Conversions You can convert a traditional IRA to a Roth IRA. H and r block free tax preparation The conversion is treated as a rollover, regardless of the conversion method used. H and r block free tax preparation Most of the rules for rollovers, described in chapter 1 under Rollover From One IRA Into Another , apply to these rollovers. H and r block free tax preparation However, the 1-year waiting period does not apply. H and r block free tax preparation Conversion methods. H and r block free tax preparation   You can convert amounts from a traditional IRA to a Roth IRA in any of the following three ways. H and r block free tax preparation Rollover. H and r block free tax preparation You can receive a distribution from a traditional IRA and roll it over (contribute it) to a Roth IRA within 60 days after the distribution. H and r block free tax preparation Trustee-to-trustee transfer. H and r block free tax preparation You can direct the trustee of the traditional IRA to transfer an amount from the traditional IRA to the trustee of the Roth IRA. H and r block free tax preparation Same trustee transfer. H and r block free tax preparation If the trustee of the traditional IRA also maintains the Roth IRA, you can direct the trustee to transfer an amount from the traditional IRA to the Roth IRA. H and r block free tax preparation Same trustee. H and r block free tax preparation   Conversions made with the same trustee can be made by redesignating the traditional IRA as a Roth IRA, rather than opening a new account or issuing a new contract. H and r block free tax preparation Income. H and r block free tax preparation   You must include in your gross income distributions from a traditional IRA that you would have had to include in income if you had not converted them into a Roth IRA. H and r block free tax preparation These amounts are normally included in income on your return for the year that you converted them from a traditional IRA to a Roth IRA. H and r block free tax preparation If you must include any amount in your gross income, you may have to increase your withholding or make estimated tax payments. H and r block free tax preparation See Publication 505, Tax Withholding and Estimated Tax. H and r block free tax preparation More information. H and r block free tax preparation   For more information on conversions, see Converting From Any Traditional IRA Into a Roth IRA in chapter 1. H and r block free tax preparation Rollover From Employer's Plan Into a Roth IRA You can roll over into a Roth IRA all or part of an eligible rollover distribution you receive from your (or your deceased spouse's): Employer's qualified pension, profit-sharing, or stock bonus plan (including a 401(k) plan); Annuity plan; Tax-sheltered annuity plan (section 403(b) plan); or Governmental deferred compensation plan (section 457 plan). H and r block free tax preparation Any amount rolled over is subject to the same rules for converting a traditional IRA into a Roth IRA. H and r block free tax preparation See Converting From Any Traditional IRA Into a Roth IRA in chapter 1. H and r block free tax preparation Also, the rollover contribution must meet the rollover requirements that apply to the specific type of retirement plan. H and r block free tax preparation Rollover methods. H and r block free tax preparation   You can roll over amounts from a qualified retirement plan to a Roth IRA in one of the following ways. H and r block free tax preparation Rollover. H and r block free tax preparation You can receive a distribution from a qualified retirement plan and roll it over (contribute) to a Roth IRA within 60 days after the distribution. H and r block free tax preparation Since the distribution is paid directly to you, the payer generally must withhold 20% of it. H and r block free tax preparation Direct rollover option. H and r block free tax preparation Your employer's qualified plan must give you the option to have any part of an eligible rollover distribution paid directly to a Roth IRA. H and r block free tax preparation Generally, no tax is withheld from any part of the designated distribution that is directly paid to the trustee of the Roth IRA. H and r block free tax preparation Rollover by nonspouse beneficiary. H and r block free tax preparation   If you are a designated beneficiary (other than a surviving spouse) of a deceased employee, you can roll over all or part of an eligible rollover distribution from one of the types of plans listed above into a Roth IRA. H and r block free tax preparation You must make the rollover by a direct trustee-to-trustee transfer into an inherited Roth IRA. H and r block free tax preparation   You will determine your required minimum distributions in years after you make the rollover based on whether the employee died before his or her required beginning date for taking distributions from the plan. H and r block free tax preparation For more information, see Distributions after the employee’s death under Tax on Excess Accumulation in Publication 575. H and r block free tax preparation Income. H and r block free tax preparation   You must include in your gross income distributions from a qualified retirement plan that you would have had to include in income if you had not rolled them over into a Roth IRA. H and r block free tax preparation You do not include in gross income any part of a distribution from a qualified retirement plan that is a return of contributions (after-tax contributions) to the plan that were taxable to you when paid. H and r block free tax preparation These amounts are normally included in income on your return for the year of the rollover from the qualified employer plan to a Roth IRA. H and r block free tax preparation If you must include any amount in your gross income, you may have to increase your withholding or make estimated tax payments. H and r block free tax preparation See Publication 505, Tax Withholding and Estimated Tax. H and r block free tax preparation For more information on eligible rollover distributions from qualified retirement plans and withholding, see Rollover From Employer's Plan Into an IRA in chapter 1. H and r block free tax preparation Military Death Gratuities and Servicemembers' Group Life Insurance (SGLI) Payments If you received a military death gratuity or SGLI payment with respect to a death from injury that occurred after October 6, 2001, you can contribute (roll over) all or part of the amount received to your Roth IRA. H and r block free tax preparation The contribution is treated as a qualified rollover contribution. H and r block free tax preparation The amount you can roll over to your Roth IRA cannot exceed the total amount that you received reduced by any part of that amount that was contributed to a Coverdell ESA or another Roth IRA. H and r block free tax preparation Any military death gratuity or SGLI payment contributed to a Roth IRA is disregarded for purposes of the 1-year waiting period between rollovers. H and r block free tax preparation The rollover must be completed before the end of the 1-year period beginning on the date you received the payment. H and r block free tax preparation The amount contributed to your Roth IRA is treated as part of your cost basis (investment in the contract) in the Roth IRA that is not taxable when distributed. H and r block free tax preparation Rollover From a Roth IRA You can withdraw, tax free, all or part of the assets from one Roth IRA if you contribute them within 60 days to another Roth IRA. H and r block free tax preparation Most of the rules for rollovers, described in chapter 1 under Rollover From One IRA Into Another , apply to these rollovers. H and r block free tax preparation However, rollovers from retirement plans other than Roth IRAs are disregarded for purposes of the 1-year waiting period between rollovers. H and r block free tax preparation A rollover from a Roth IRA to an employer retirement plan is not allowed. H and r block free tax preparation A rollover from a designated Roth account can only be made to another designated Roth account or to a Roth IRA. H and r block free tax preparation If you roll over an amount from one Roth IRA to another Roth IRA, the 5-year period used to determine qualified distributions does not change. H and r block free tax preparation The 5-year period begins with the first taxable year for which the contribution was made to the initial Roth IRA. H and r block free tax preparation See What are Qualified Distributions , later. H and r block free tax preparation Rollover of Exxon Valdez Settlement Income If you are a qualified taxpayer (defined in chapter 1, earlier) and you received qualified settlement income (defined in chapter 1, earlier), you can contribute all or part of the amount received to an eligible retirement plan which includes a Roth IRA. H and r block free tax preparation The rules for contributing qualified settlement income to a Roth IRA are the same as the rules for contributing qualified settlement income to a traditional IRA with the following exception. H and r block free tax preparation Qualified settlement income that is contributed to a Roth IRA, or to a designated Roth account, will be: Included in your taxable income for the year the qualified settlement income was received, and Treated as part of your cost basis (investment in the contract) in the Roth IRA that is not taxable when distributed. H and r block free tax preparation For more information, see Rollover of Exxon Valdez Settlement Income in chapter 1. H and r block free tax preparation Rollover of Airline Payments If you are a qualified airline employee (defined next), you may contribute any portion of an airline payment (defined below) you receive to a Roth IRA. H and r block free tax preparation The contribution must be made within 180 days from the date you received the payment. H and r block free tax preparation The contribution will be treated as a qualified rollover contribution. H and r block free tax preparation The rollover contribution is included in income to the extent it would be included in income if it were not part of the rollover contribution. H and r block free tax preparation Also, any reduction in the airline payment amount on account of employment taxes shall be disregarded when figuring the amount you can contribute to your Roth IRA. H and r block free tax preparation Qualified airline employee. H and r block free tax preparation    A current or former employee of a commercial airline carrier who was a participant in a qualified defined benefit plan maintained by the carrier which was terminated or became subject to restrictions under Section 402(b) of the Pension Protection Act of 2006. H and r block free tax preparation These provisions also apply to surviving spouses of qualified airline employees. H and r block free tax preparation Airline payment. H and r block free tax preparation    An airline payment is any payment of money or other property that is paid to a qualified airline employee from a commercial airline carrier. H and r block free tax preparation The payment also must be made both: Under the approval of an order of federal bankruptcy court in a case filed after September 11, 2001, and before January 1, 2007, and In respect of the qualified airline employee’s interest in a bankruptcy claim against the airline carrier, any note of the carrier (or amount paid in lieu of a note being issued), or any other fixed obligation of the carrier to pay a lump sum amount. H and r block free tax preparation Any reduction in the airline payment amount on account of employment taxes shall be disregarded when figuring the amount you can roll over to your traditional IRA. H and r block free tax preparation Also, an airline payment shall not include any amount payable on the basis of the airline carrier’s future earnings or profits. H and r block free tax preparation Are Distributions Taxable? You do not include in your gross income qualified distributions or distributions that are a return of your regular contributions from your Roth IRA(s). H and r block free tax preparation You also do not include distributions from your Roth IRA that you roll over tax free into another Roth IRA. H and r block free tax preparation You may have to include part of other distributions in your income. H and r block free tax preparation See Ordering Rules for Distributions , later. H and r block free tax preparation Basis of distributed property. H and r block free tax preparation   The basis of property distributed from a Roth IRA is its fair market value (FMV) on the date of distribution, whether or not the distribution is a qualified distribution. H and r block free tax preparation Withdrawals of contributions by due date. H and r block free tax preparation   If you withdraw contributions (including any net earnings on the contributions) by the due date of your return for the year in which you made the contribution, the contributions are treated as if you never made them. H and r block free tax preparation If you have an extension of time to file your return, you can withdraw the contributions and earnings by the extended due date. H and r block free tax preparation The withdrawal of contributions is tax free, but you must include the earnings on the contributions in income for the year in which you made the contributions. H and r block free tax preparation What Are Qualified Distributions? A qualified distribution is any payment or distribution from your Roth IRA that meets the following requirements. H and r block free tax preparation It is made after the 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for your benefit, and The payment or distribution is: Made on or after the date you reach age 59½, Made because you are disabled (defined earlier), Made to a beneficiary or to your estate after your death, or One that meets the requirements listed under First home under Exceptions in chapter 1 (up to a $10,000 lifetime limit). H and r block free tax preparation Additional Tax on Early Distributions If you receive a distribution that is not a qualified distribution, you may have to pay the 10% additional tax on early distributions as explained in the following paragraphs. H and r block free tax preparation Distributions of conversion and certain rollover contributions within 5-year period. H and r block free tax preparation   If, within the 5-year period starting with the first day of your tax year in which you convert an amount from a traditional IRA or rollover an amount from a qualified retirement plan to a Roth IRA, you take a distribution from a Roth IRA, you may have to pay the 10% additional tax on early distributions. H and r block free tax preparation You generally must pay the 10% additional tax on any amount attributable to the part of the amount converted or rolled over (the conversion or rollover contribution) that you had to include in income (recapture amount). H and r block free tax preparation A separate 5-year period applies to each conversion and rollover. H and r block free tax preparation See Ordering Rules for Distributions , later, to determine the recapture amount, if any. H and r block free tax preparation   The 5-year period used for determining whether the 10% early distribution tax applies to a distribution from a conversion or rollover contribution is separately determined for each conversion and rollover, and is not necessarily the same as the 5-year period used for determining whether a distribution is a qualified distribution. H and r block free tax preparation See What Are Qualified Distributions , earlier. H and r block free tax preparation   For example, if a calendar-year taxpayer makes a conversion contribution on February 25, 2013, and makes a regular contribution for 2012 on the same date, the 5-year period for the conversion begins January 1, 2013, while the 5-year period for the regular contribution begins on January 1, 2012. H and r block free tax preparation   Unless one of the exceptions listed later applies, you must pay the additional tax on the portion of the distribution attributable to the part of the conversion or rollover contribution that you had to include in income because of the conversion or rollover. H and r block free tax preparation   You must pay the 10% additional tax in the year of the distribution, even if you had included the conversion or rollover contribution in an earlier year. H and r block free tax preparation You also must pay the additional tax on any portion of the distribution attributable to earnings on contributions. H and r block free tax preparation Other early distributions. H and r block free tax preparation   Unless one of the exceptions listed below applies, you must pay the 10% additional tax on the taxable part of any distributions that are not qualified distributions. H and r block free tax preparation Exceptions. H and r block free tax preparation   You may not have to pay the 10% additional tax in the following situations. H and r block free tax preparation You have reached age 59½. H and r block free tax preparation You are totally and permanently disabled. H and r block free tax preparation You are the beneficiary of a deceased IRA owner. H and r block free tax preparation You use the distribution to buy, build, or rebuild a first home. H and r block free tax preparation The distributions are part of a series of substantially equal payments. H and r block free tax preparation You have unreimbursed medical expenses that are more than 10% (or 7. H and r block free tax preparation 5% if you or your spouse was born before January 2, 1949) of your adjusted gross income (defined earlier) for the year. H and r block free tax preparation You are paying medical insurance premiums during a period of unemployment. H and r block free tax preparation The distributions are not more than your qualified higher education expenses. H and r block free tax preparation The distribution is due to an IRS levy of the qualified plan. H and r block free tax preparation The distribution is a qualified reservist distribution. H and r block free tax preparation Most of these exceptions are discussed earlier in chapter 1 under Early Distributions . H and r block free tax preparation Please click here for the text description of the image. H and r block free tax preparation Is Roth Distributions a Qualified Distribution? Ordering Rules for Distributions If you receive a distribution from your Roth IRA that is not a qualified distribution, part of it may be taxable. H and r block free tax preparation There is a set order in which contributions (including conversion contributions and rollover contributions from qualified retirement plans) and earnings are considered to be distributed from your Roth IRA. H and r block free tax preparation For these purposes, disregard the withdrawal of excess contributions and the earnings on them (discussed earlier under What if You Contribute Too Much ). H and r block free tax preparation Order the distributions as follows. H and r block free tax preparation Regular contributions. H and r block free tax preparation Conversion and rollover contributions, on a first-in, first-out basis (generally, total conversions and rollovers from the earliest year first). H and r block free tax preparation See Aggregation (grouping and adding) rules, later. H and r block free tax preparation Take these conversion and rollover contributions into account as follows: Taxable portion (the amount required to be included in gross income because of the conversion or rollover) first, and then the Nontaxable portion. H and r block free tax preparation Earnings on contributions. H and r block free tax preparation Disregard rollover contributions from other Roth IRAs for this purpose. H and r block free tax preparation Aggregation (grouping and adding) rules. H and r block free tax preparation   Determine the taxable amounts distributed (withdrawn), distributions, and contributions by grouping and adding them together as follows. H and r block free tax preparation Add all distributions from all your Roth IRAs during the year together. H and r block free tax preparation Add all regular contributions made for the year (including contributions made after the close of the year, but before the due date of your return) together. H and r block free tax preparation Add this total to the total undistributed regular contributions made in prior years. H and r block free tax preparation Add all conversion and rollover contributions made during the year together. H and r block free tax preparation For purposes of the ordering rules, in the case of any conversion or rollover in which the conversion or rollover distribution is made in 2013 and the conversion or rollover contribution is made in 2014, treat the conversion or rollover contribution as contributed before any other conversion or rollover contributions made in 2014. H and r block free tax preparation Add any recharacterized contributions that end up in a Roth IRA to the appropriate contribution group for the year that the original contribution would have been taken into account if it had been made directly to the Roth IRA. H and r block free tax preparation   Disregard any recharacterized contribution that ends up in an IRA other than a Roth IRA for the purpose of grouping (aggregating) both contributions and distributions. H and r block free tax preparation Also disregard any amount withdrawn to correct an excess contribution (including the earnings withdrawn) for this purpose. H and r block free tax preparation Example. H and r block free tax preparation On October 15, 2009, Justin converted all $80,000 in his traditional IRA to his Roth IRA. H and r block free tax preparation His Forms 8606 from prior years show that $20,000 of the amount converted is his basis. H and r block free tax preparation Justin included $60,000 ($80,000 − $20,000) in his gross income. H and r block free tax preparation On February 23, 2013, Justin made a regular contribution of $5,000 to a Roth IRA. H and r block free tax preparation On November 8, 2013, at age 60, Justin took a $7,000 distribution from his Roth IRA. H and r block free tax preparation The first $5,000 of the distribution is a return of Justin's regular contribution and is not includible in his income. H and r block free tax preparation The next $2,000 of the distribution is not includible in income because it was included previously. H and r block free tax preparation Figuring your recapture amount. H and r block free tax preparation   If you had an early distribution from your Roth IRAs in 2013, you must allocate the early distribution by using the Recapture Amount—Allocation Chart, later. H and r block free tax preparation Recapture Amount—Allocation Chart Enter the amount from your 2013 Form 8606, line 19   Before you begin: You will need your prior year Form(s) 8606 and income tax return(s) if you entered an amount on any line(s) as indicated below. H and r block free tax preparation   You will now allocate the amount you entered above (2013 Form 8606, line 19) in the order shown, to the amounts on the lines listed below (to the extent a prior year distribution was not allocable to the amount). H and r block free tax preparation The maximum amount you can enter on each line below is the amount entered on the referenced lines of the form for that year. H and r block free tax preparation Note. H and r block free tax preparation Once you have allocated the full amount from your 2013 Form 8606, line 19, STOP. H and r block free tax preparation See the Example , earlier. H and r block free tax preparation Tax Year Your Form 2013 Form 8606, line 20   Form 8606, line 22   1998 Form 8606, line 16   Form 8606, line 15   1999 Form 8606, line 16   Form 8606, line 15   2000 Form 8606, line 16   Form 8606, line 15   2001 Form 8606, line 18   Form 8606, line 17   2002 Form 8606, line 18   Form 8606, line 17   2003 Form 8606, line 18   Form 8606, line 17   2004 Form 8606, line 18   Form 8606, line 17   2005 Form 8606, line 18   Form 8606, line 17   2006 Form 8606, line 18   Form 8606, line 17   2007 Form 8606, line 18   Form 8606, line 17   2008 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2009 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2010 Form 8606, lines 18 and 23   Form 8606, lines 17 and 22   2011 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2012 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2013 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2013 Form 8606, line 25       *Only include those amounts rolled over to a Roth IRA. H and r block free tax preparation  **Only include any contributions (usually Form 1099-R, box 5) that were taxable to you when made and rolled over to a Roth IRA. H and r block free tax preparation Amount to include on Form 5329, line 1. H and r block free tax preparation   Include on line 1 of your 2013 Form 5329 the following four amounts from the Recapture Amount—Allocation Chart that you filled out. H and r block free tax preparation The amount you allocated to line 20 of your 2013 Form 8606. H and r block free tax preparation The amount(s) allocated to your 2009 through 2013 Forms 8606, line 18, and your 2010 Form 8606, line 23. H and r block free tax preparation The amount(s) allocated to your 2009, 2011, 2012, and 2013 Forms 1040, line 16b; Forms 1040A, line 12b; and Forms 1040NR, line 17b. H and r block free tax preparation The amount from your 2013 Form 8606, line 25. H and r block free tax preparation   Also, include any amount you allocated to line 20 of your 2013 Form 8606 on your 2013 Form 5329, line 2, and enter exception number 09. H and r block free tax preparation Example. H and r block free tax preparation Ishmael, age 32, opened a Roth IRA in 2000. H and r block free tax preparation He made the maximum contributions to it every year. H and r block free tax preparation In addition, he made the following transactions into his Roth IRA. H and r block free tax preparation In 2005, he converted $10,000 from his traditional IRA into his Roth IRA. H and r block free tax preparation He filled out a 2005 Form 8606 and attached it with his 2005 Form 1040. H and r block free tax preparation He entered $0 on line 17 of Form 8606 because he took a deduction for all the contributions to the traditional IRA, therefore he has no basis. H and r block free tax preparation He entered $10,000 on line 18 of Form 8606. H and r block free tax preparation In 2011, he rolled over the entire balance of his qualified retirement plan, $20,000, into a Roth IRA when he changed jobs. H and r block free tax preparation He used a 2011 Form 1040 to file his taxes. H and r block free tax preparation He entered $20,000 on line 16a of Form 1040 because that was the amount reported in box 1 of his 2011 Form 1099-R. H and r block free tax preparation Box 5 of his 2011 Form 1099-R reported $0 since he did not make any after-tax contributions to the qualified retirement plan. H and r block free tax preparation He entered $20,000 on line 16b of Form 1040 since that is the taxable amount that was rolled over in 2011. H and r block free tax preparation The total balance in his Roth IRA as of January 1, 2013 was $105,000 ($50,000 in contributions from 2000 through 2012 + $10,000 from the 2005 conversion + $20,000 from the 2011 rollover + $25,000 from earnings). H and r block free tax preparation He has not taken any early distribution from his Roth IRA before 2013. H and r block free tax preparation In 2013, he made the maximum contribution of $5,500 to his Roth IRA. H and r block free tax preparation In August of 2013, he took a $85,500 early distribution from his Roth IRA to use as a down payment on the purchase of his first home. H and r block free tax preparation See his filled out Illustrated Recapture Amount—Allocation Chart, later, to see how he allocated the amounts from the above transactions. H and r block free tax preparation Based on his allocation, he would enter $20,000 on his 2013 Form 5329, line 1 (see Amount to include on Form 5329, line 1 , above). H and r block free tax preparation He should also report $10,000 on his 2013 Form 5329, line 2, and enter exception 09 since that amount is not subject to the 10% additional tax on early distributions. H and r block free tax preparation Illustrated Recapture Amount—Allocation Chart Enter the amount from your 2013 Form 8606, line 19 $85,500 Before you begin: You will need your prior year Form(s) 8606 and income tax return(s) if you entered an amount on any line(s) as indicated below. H and r block free tax preparation   You will now allocate the amount you entered above (2013 Form 8606, line 19) in the order shown, to the amounts on the lines listed below (to the extent a prior year distribution was not allocable to the amount). H and r block free tax preparation The maximum amount you can enter on each line below is the amount entered on the referenced lines of the form for that year. H and r block free tax preparation Note. H and r block free tax preparation Once you have allocated the full amount from your 2013 Form 8606, line 19, STOP. H and r block free tax preparation See the Example , earlier. H and r block free tax preparation Tax Year Your Form 2013 Form 8606, line 20 $10,000 Form 8606, line 22 $55,500 1998 Form 8606, line 16   Form 8606, line 15   1999 Form 8606, line 16   Form 8606, line 15   2000 Form 8606, line 16   Form 8606, line 15   2001 Form 8606, line 18   Form 8606, line 17   2002 Form 8606, line 18   Form 8606, line 17   2003 Form 8606, line 18   Form 8606, line 17   2004 Form 8606, line 18   Form 8606, line 17   2005 Form 8606, line 18 $10,000 Form 8606, line 17 $-0- 2006 Form 8606, line 18   Form 8606, line 17   2007 Form 8606, line 18   Form 8606, line 17   2008 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2009 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2010 Form 8606, lines 18 and 23   Form 8606, lines 17 and 22   2011 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b* $10,000 Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2012 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2013 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2013 Form 8606, line 25       *Only include those amounts rolled over to a Roth IRA. H and r block free tax preparation  **Only include any contributions (usually Form 1099-R, box 5) that were taxable to you when made and rolled over to a Roth IRA. H and r block free tax preparation How Do You Figure the Taxable Part? To figure the taxable part of a distribution that is not a qualified distribution, complete Form 8606, Part III. H and r block free tax preparation Must You Withdraw or Use Assets? You are not required to take distributions from your Roth IRA at any age. H and r block free tax preparation The minimum distribution rules that apply to traditional IRAs do not apply to Roth IRAs while the owner is alive. H and r block free tax preparation However, after the death of a Roth IRA owner, certain of the minimum distribution rules that apply to traditional IRAs also apply to Roth IRAs as explained later under Distributions After Owner's Death . H and r block free tax preparation Minimum distributions. H and r block free tax preparation   You cannot use your Roth IRA to satisfy minimum distribution requirements for your traditional IRA. H and r block free tax preparation Nor can you use distributions from traditional IRAs for required distributions from Roth IRAs. H and r block free tax preparation See Distributions to beneficiaries , later. H and r block free tax preparation Recognizing Losses on Investments If you have a loss on your Roth IRA investment, you can recognize the loss on your income tax return, but only when all the amounts in all of your Roth IRA accounts have been distributed to you and the total distributions are less than your unrecovered basis. H and r block free tax preparation Your basis is the total amount of contributions in your Roth IRAs. H and r block free tax preparation You claim the loss as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions on Schedule A (Form 1040). H and r block free tax preparation Any such losses are added back to taxable income for purposes of calculating the alternative minimum tax. H and r block free tax preparation Distributions After Owner's Death If a Roth IRA owner dies, the minimum distribution rules that apply to traditional IRAs apply to Roth IRAs as though the Roth IRA owner died before his or her required beginning date. H and r block free tax preparation See When Can You Withdraw or Use Assets? in chapter 1. H and r block free tax preparation Distributions to beneficiaries. H and r block free tax preparation   Generally, the entire interest in the Roth IRA must be distributed by the end of the fifth calendar year after the year of the owner's death unless the interest is payable to a designated beneficiary over the life or life expectancy of the designated beneficiary. H and r block free tax preparation (See When Must You Withdraw Assets? (Required Minimum Distributions) in chapter 1. H and r block free tax preparation )   If paid as an annuity, the entire interest must be payable over a period not greater than the designated beneficiary's life expectancy and distributions must begin before the end of the calendar year following the year of death. H and r block free tax preparation Distributions from another Roth IRA cannot be substituted for these distributions unless the other Roth IRA was inherited from the same decedent. H and r block free tax preparation   If the sole beneficiary is the spouse, he or she can either delay distributions until the decedent would have reached age 70½ or treat the Roth IRA as his or her own. H and r block free tax preparation Combining with other Roth IRAs. H and r block free tax preparation   A beneficiary can combine an inherited Roth IRA with another Roth IRA maintained by the beneficiary only if the beneficiary either: Inherited the other Roth IRA from the same decedent, or Was the spouse of the decedent and the sole beneficiary of the Roth IRA and elects to treat it as his or her own IRA. H and r block free tax preparation Distributions that are not qualified distributions. H and r block free tax preparation   If a distribution to a beneficiary is not a qualified distribution, it is generally includible in the beneficiary's gross income in the same manner as it would have been included in the owner's income had it been distributed to the IRA owner when he or she was alive. H and r block free tax preparation   If the owner of a Roth IRA dies before the end of: The 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for the owner's benefit, or The 5-year period starting with the year of a conversion contribution from a traditional IRA or a rollover from a qualified retirement plan to a Roth IRA, each type of contribution is divided among multiple beneficiaries according to the pro-rata share of each. H and r block free tax preparation See Ordering Rules for Distributions , earlier in this chapter under Are Distributions Taxable. H and r block free tax preparation Example. H and r block free tax preparation When Ms. H and r block free tax preparation Hibbard died in 2013, her Roth IRA contained regular contributions of $4,000, a conversion contribution of $10,000 that was made in 2009, and earnings of $2,000. H and r block free tax preparation No distributions had been made from her IRA. H and r block free tax preparation She had no basis in the conversion contribution in 2009. H and r block free tax preparation When she established this Roth IRA (her first) in 2009, she named each of her four children as equal beneficiaries. H and r block free tax preparation Each child will receive one-fourth of each type of contribution and one-fourth of the earnings. H and r block free tax preparation An immediate distribution of $4,000 to each child will be treated as $1,000 from regular contributions, $2,500 from conversion contributions, and $500 from earnings. H and r block free tax preparation In this case, because the distributions are made before the end of the applicable 5-year period for a qualified distribution, each beneficiary includes $500 in income for 2013. H and r block free tax preparation The 10% additional tax on early distributions does not apply because the distribution was made to the beneficiaries as a result of the death of the IRA owner. H and r block free tax preparation If distributions from an inherited Roth IRA are less than the required minimum distribution for the year, discussed in chapter 1 under When Must You Withdraw Assets? (Required Minimum Distributions), you may have to pay a 50% excise tax for that year on the amount not distributed as required. H and r block free tax preparation For the tax on excess accumulations (insufficient distributions), see Excess Accumulations (Insufficient Distributions) under What Acts Result in Penalties or Additional Taxes? in chapter 1. H and r block free tax preparation If this applies to you, substitute “Roth IRA” for “traditional IRA” in that discussion. H and r block free tax preparation Prev  Up  Next   Home   More Online Publications