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H&r block at home free Publication 15-T - Introductory Material Prev  Up  Next   Home   More Online Publications
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Understanding your CP03C Notice

You received a tax credit (called the First-Time Homebuyer Credit) for a house you purchased. You may need to file a form to report a change in ownership to the house you purchased.

Tax publications you may find useful

How to get help

Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Form 2848, Power of Attorney and Declaration of Representative.

Or you may qualify for help from a Low Income Taxpayer Clinic.
 


What you need to do


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Answers to Common Questions

How much is the repayment amount?
The repayment amount is equal to the full amount of the credit you received minus any credit repayments you may have already made.

Do I have to repay the credit if my home was is destroyed, condemned, or disposed of under threat of condemnation and I acquired a new home within two years?
You do not have to repay the credit if you purchased a new main home within two years of the event.

How and when do I repay the credit?
You must file a Form 5405, First-Time Homebuyer Credit and Repayment of the Credit with your tax return for the year in which the change occurred. You can report your change in ownership status by checking the appropriate box in Part III (Disposition or Change in Use of Main Home for Which the Credit Was Claimed) of the form.

You have to repay the credit by including it as additional tax on the federal income tax return for the year in which the home stopped being your main home. For example, a taxpayer who reports a change of ownership occurring in 2010 must repay the first-time homebuyer credit, minus any payments they might have made to repay the credit, in their 2010 tax return.

I heard that taxpayers didn't have to repay the First Time Homebuyers Credit any longer. Didn't the law change?
The law changed for home purchases in 2009 and 2010, which now have no 15-year repayment requirement. The law did not change the repayment requirement for purchases for home that cease being a main home.

What if my spouse has died, do I have to repay the entire amount of the credit?
If, unfortunately, a spouse is deceased, the remaining spouse only has to repay half of the remaining credit balance: we won't seek repayment for the deceased spouse's half. For example, the surviving spouse will owe only $3,750 for a $7,500 first-time homebuyer credit taken on an earlier joint income tax return.

What if I don't have to pay any additional tax, do I still have to report the change in my ownership status?
Yes, even if you don't have to pay any additional tax, you still need to complete a Form 5405 to report the disposition of your property.

Page Last Reviewed or Updated: 14-Mar-2014

The H&r Block At Home Free

H&r block at home free 17. H&r block at home free   Individual Retirement Arrangements (IRAs) Table of Contents What's New Reminders Introduction Useful Items - You may want to see: Traditional IRAsWho Can Open a Traditional IRA? When and How Can a Traditional IRA Be Opened? How Much Can Be Contributed? When Can Contributions Be Made? How Much Can You Deduct? Nondeductible Contributions Inherited IRAs Can You Move Retirement Plan Assets? When Can You Withdraw or Use IRA Assets? When Must You Withdraw IRA Assets? (Required Minimum Distributions) Are Distributions Taxable? What Acts Result in Penalties or Additional Taxes? Roth IRAsWhat Is a Roth IRA? When Can a Roth IRA Be Opened? Can You Contribute to a Roth IRA? Can You Move Amounts Into a Roth IRA? Are Distributions Taxable? What's New Traditional IRA contribution and deduction limit. H&r block at home free  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. H&r block at home free 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. H&r block at home free For more information, see How Much Can Be Contributed? later. H&r block at home free Roth IRA contribution limit. H&r block at home free  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&r block at home free 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&r block at home free However, if your modified adjusted gross income (AGI) is above a certain amount, your contribution limit may be reduced. H&r block at home free For more information, see How Much Can Be Contributed? under Can You Contribute to a Roth IRA? later. H&r block at home free Modified AGI limit for traditional IRA contributions increased. H&r block at home free  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. H&r block at home free 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. H&r block at home free If your modified AGI is $188,000 or more, you cannot take a deduction for contributions to a traditional IRA. H&r block at home free See How Much Can You Deduct , later. H&r block at home free Modified AGI limit for Roth IRA contributions increased. H&r block at home free  For 2013, your Roth IRA contribution limit is reduced (phased out) in the following situations. H&r block at home free Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $178,000. H&r block at home free You cannot make a Roth IRA contribution if your modified AGI is $188,000 or more. H&r block at home free 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&r block at home free You cannot make a Roth IRA contribution if your modified AGI is $127,000 or more. H&r block at home free 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&r block at home free You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. H&r block at home free See Can You Contribute to a Roth IRA , later. H&r block at home free Net Investment Income Tax. H&r block at home free   For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan including IRAs (for example; 401(a), 403(a), 403(b), 408, 408A, or 457(b) plans). H&r block at home free However, these distributions are taken into account when determining the modified adjusted gross income threshold. H&r block at home free Distributions from a nonqualified retirement plan are included in net investment income. H&r block at home free See Form 8960, Net Investment Income Tax - Individuals, Estates, and Trusts, and its instructions for more information. H&r block at home free Name change. H&r block at home free  All spousal IRAs have been renamed Kay Bailey Hutchison Spousal IRAs. H&r block at home free There are no changes to the rules regarding these IRAs. H&r block at home free See Kay Bailey Hutchison Spousal IRA Limit , later, for more information. H&r block at home free Reminders 2014 limits. H&r block at home free   You can find information about the 2014 contribution and AGI limits in Publication 590. H&r block at home free Contributions to both traditional and Roth IRAs. H&r block at home free   For information on your combined contribution limit if you contribute to both traditional and Roth IRAs, see Roth IRAs and traditional IRAs under How Much Can Be Contributed? in Roth IRAs, later. H&r block at home free Statement of required minimum distribution. H&r block at home free  If a minimum distribution from your IRA is required, the trustee, custodian, or issuer that held the IRA at the end of the preceding year must either report the amount of the required minimum distribution to you, or offer to calculate it for you. H&r block at home free The report or offer must include the date by which the amount must be distributed. H&r block at home free The report is due January 31 of the year in which the minimum distribution is required. H&r block at home free It can be provided with the year-end fair market value statement that you normally get each year. H&r block at home free No report is required for IRAs of owners who have died. H&r block at home free IRA interest. H&r block at home free  Although interest earned from your IRA is generally not taxed in the year earned, it is not tax-exempt interest. H&r block at home free Tax on your traditional IRA is generally deferred until you take a distribution. H&r block at home free Do not report this interest on your tax return as tax-exempt interest. H&r block at home free Form 8606. H&r block at home free   To designate contributions as nondeductible, you must file Form 8606, Nondeductible IRAs. H&r block at home free The term “50 or older” is used several times in this chapter. H&r block at home free It refers to an IRA owner who is age 50 or older by the end of the tax year. H&r block at home free Introduction An individual retirement arrangement (IRA) is a personal savings plan that gives you tax advantages for setting aside money for your retirement. H&r block at home free This chapter discusses the following topics. H&r block at home free The rules for a traditional IRA (any IRA that is not a Roth or SIMPLE IRA). H&r block at home free The Roth IRA, which features nondeductible contributions and tax-free distributions. H&r block at home free Simplified Employee Pensions (SEPs) and Savings Incentive Match Plans for Employees (SIMPLEs) are not discussed in this chapter. H&r block at home free For more information on these plans and employees' SEP IRAs and SIMPLE IRAs that are part of these plans, see Publications 560 and 590. H&r block at home free For information about contributions, deductions, withdrawals, transfers, rollovers, and other transactions, see Publication 590. H&r block at home free Useful Items - You may want to see: Publication 560 Retirement Plans for Small Business 590 Individual Retirement Arrangements (IRAs) Form (and Instructions) 5329 Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts 8606 Nondeductible IRAs Traditional IRAs In this chapter, the original IRA (sometimes called an ordinary or regular IRA) is referred to as a “traditional IRA. H&r block at home free ” A traditional IRA is any IRA that is not a Roth IRA or a SIMPLE IRA. H&r block at home free Two advantages of a traditional IRA are: You may be able to deduct some or all of your contributions to it, depending on your circumstances, and Generally, amounts in your IRA, including earnings and gains, are not taxed until they are distributed. H&r block at home free 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. H&r block at home free What is compensation?   Generally, compensation is what you earn from working. H&r block at home free Compensation includes wages, salaries, tips, professional fees, bonuses, and other amounts you receive for providing personal services. H&r block at home free 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). H&r block at home free   Scholarship and fellowship payments are compensation for this purpose only if shown in box 1 of Form W-2. H&r block at home free   Compensation also includes commissions and taxable alimony and separate maintenance payments. H&r block at home free Self-employment income. H&r block at home free   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 deductible part of your self-employment tax. H&r block at home free   Compensation includes earnings from self-employment even if they are not subject to self-employment tax because of your religious beliefs. H&r block at home free Nontaxable combat pay. H&r block at home free   For IRA purposes, if you were a member of the U. H&r block at home free S. H&r block at home free Armed Forces, your compensation includes any nontaxable combat pay you receive. H&r block at home free What is not compensation?   Compensation does not include any of the following items. H&r block at home free Earnings and profits from property, such as rental income, interest income, and dividend income. H&r block at home free Pension or annuity income. H&r block at home free Deferred compensation received (compensation payments postponed from a past year). H&r block at home free Income from a partnership for which you do not provide services that are a material income-producing factor. H&r block at home free Conservation Reserve Program (CRP) payments reported on Schedule SE (Form 1040), line 1b. H&r block at home free Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs. H&r block at home free When and How Can a Traditional IRA Be Opened? You can open a traditional IRA at any time. H&r block at home free However, the time for making contributions for any year is limited. H&r block at home free See When Can Contributions Be Made , later. H&r block at home free You can open different kinds of IRAs with a variety of organizations. H&r block at home free You can open an IRA at a bank or other financial institution or with a mutual fund or life insurance company. H&r block at home free You can also open an IRA through your stockbroker. H&r block at home free Any IRA must meet Internal Revenue Code requirements. H&r block at home free Kinds of traditional IRAs. H&r block at home free   Your traditional IRA can be an individual retirement account or annuity. H&r block at home free It can be part of either a simplified employee pension (SEP) or an employer or employee association trust account. H&r block at home free How Much Can Be Contributed? There are limits and other rules that affect the amount that can be contributed to a traditional IRA. H&r block at home free These limits and other rules are explained below. H&r block at home free Community property laws. H&r block at home free   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. H&r block at home free This is the rule even in states with community property laws. H&r block at home free Brokers' commissions. H&r block at home free   Brokers' commissions paid in connection with your traditional IRA are subject to the contribution limit. H&r block at home free Trustees' fees. H&r block at home free   Trustees' administrative fees are not subject to the contribution limit. H&r block at home free Qualified reservist repayments. H&r block at home free   If you are (or 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 you received. H&r block at home free 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. H&r block at home free 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 similar arrangement. H&r block at home free   For more information, see Qualified reservist repayments under How Much Can Be Contributed? in chapter 1 of Publication 590. H&r block at home free Contributions on your behalf to a traditional IRA reduce your limit for contributions to a Roth IRA. H&r block at home free (See Roth IRAs, later. H&r block at home free ) General limit. H&r block at home free   For 2013, the most that can be contributed to your traditional IRA generally is the smaller of the following amounts. H&r block at home free $5,500 ($6,500 if you are 50 or older). H&r block at home free Your taxable compensation (defined earlier) for the year. H&r block at home free 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. H&r block at home free (See Nondeductible Contributions , later. H&r block at home free ) Qualified reservist repayments do not affect this limit. H&r block at home free Example 1. H&r block at home free Betty, who is 34 years old and single, earned $24,000 in 2013. H&r block at home free Her IRA contributions for 2013 are limited to $5,500. H&r block at home free Example 2. H&r block at home free John, an unmarried college student working part time, earned $3,500 in 2013. H&r block at home free His IRA contributions for 2013 are limited to $3,500, the amount of his compensation. H&r block at home free Kay Bailey Hutchison Spousal IRA limit. H&r block at home free   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 amounts. H&r block at home free $5,500 ($6,500 if you are 50 or older). H&r block at home free The total compensation includible in the gross income of both you and your spouse for the year, reduced by the following two amounts. H&r block at home free Your spouse's IRA contribution for the year to a traditional IRA. H&r block at home free Any contribution for the year to a Roth IRA on behalf of your spouse. H&r block at home free 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 50 or older, or $13,000 if both of you are 50 or older). H&r block at home free 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). H&r block at home free Contributions must be in the form of money (cash, check, or money order). H&r block at home free Property cannot be contributed. H&r block at home free Contributions must be made by due date. H&r block at home free   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. H&r block at home free Age 70½ rule. H&r block at home free   Contributions cannot be made to your traditional IRA for the year in which you reach age 70½ or for any later year. H&r block at home free   You attain age 70½ on the date that is 6 calendar months after the 70th anniversary of your birth. H&r block at home free If you were born on or before June 30, 1943, you cannot contribute for 2013 or any later year. H&r block at home free Designating year for which contribution is made. H&r block at home free   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. H&r block at home free 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). H&r block at home free Filing before a contribution is made. H&r block at home free   You can file your return claiming a traditional IRA contribution before the contribution is actually made. H&r block at home free Generally, the contribution must be made by the due date of your return, not including extensions. H&r block at home free Contributions not required. H&r block at home free   You do not have to contribute to your traditional IRA for every tax year, even if you can. H&r block at home free 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 it applies). H&r block at home free However, if you or your spouse was covered by an employer retirement plan, you may not be able to deduct this amount. H&r block at home free See Limit If Covered by Employer Plan , later. H&r block at home free You may be able to claim a credit for contributions to your traditional IRA. H&r block at home free For more information, see chapter 37. H&r block at home free Trustees' fees. H&r block at home free   Trustees' administrative fees that are billed separately and paid in connection with your traditional IRA are not deductible as IRA contributions. H&r block at home free However, they may be deductible as a miscellaneous itemized deduction on Schedule A (Form 1040). H&r block at home free See chapter 28. H&r block at home free Brokers' commissions. H&r block at home free   Brokers' commissions are part of your IRA contribution and, as such, are deductible subject to the limits. H&r block at home free Full deduction. H&r block at home free   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 traditional IRAs of up to the lesser of: $5,500 ($6,500 if you are age 50 or older in 2013). H&r block at home free 100% of your compensation. H&r block at home free This limit is reduced by any contributions made to a 501(c)(18) plan on your behalf. H&r block at home free Kay Bailey Hutchison Spousal IRA. H&r block at home free   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 the following amounts. H&r block at home free $5,500 ($6,500 if the spouse with the lower compensation is age 50 or older in 2013). H&r block at home free The total compensation includible in the gross income of both spouses for the year reduced by the following three amounts. H&r block at home free The IRA deduction for the year of the spouse with the greater compensation. H&r block at home free Any designated nondeductible contribution for the year made on behalf of the spouse with the greater compensation. H&r block at home free Any contributions for the year to a Roth IRA on behalf of the spouse with the greater compensation. H&r block at home free This limit is reduced by any contributions to a 501(c)(18) plan on behalf of the spouse with the lesser compensation. H&r block at home free Note. H&r block at home free 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. H&r block at home free After a divorce or legal separation, you can deduct only contributions to your own IRA. H&r block at home free Your deductions are subject to the rules for single individuals. H&r block at home free Covered by an employer retirement plan. H&r block at home free   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. H&r block at home free This is discussed later under Limit If Covered by Employer Plan . H&r block at home free Limits on the amount you can deduct do not affect the amount that can be contributed. H&r block at home free See Nondeductible Contributions , later. H&r block at home free 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. H&r block at home free The “Retirement plan” box should be checked if you were covered. H&r block at home free Reservists and volunteer firefighters should also see Situations in Which You Are Not Covered by an Employer Plan , later. H&r block at home free If you are not certain whether you were covered by your employer's retirement plan, you should ask your employer. H&r block at home free Federal judges. H&r block at home free   For purposes of the IRA deduction, federal judges are covered by an employer retirement plan. H&r block at home free For Which Year(s) Are You Covered by an Employer Plan? Special rules apply to determine the tax years for which you are covered by an employer plan. H&r block at home free These rules differ depending on whether the plan is a defined contribution plan or a defined benefit plan. H&r block at home free Tax year. H&r block at home free   Your tax year is the annual accounting period you use to keep records and report income and expenses on your income tax return. H&r block at home free For almost all people, the tax year is the calendar year. H&r block at home free Defined contribution plan. H&r block at home free   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. H&r block at home free   A defined contribution plan is a plan that provides for a separate account for each person covered by the plan. H&r block at home free Types of defined contribution plans include profit-sharing plans, stock bonus plans, and money purchase pension plans. H&r block at home free Defined benefit plan. H&r block at home free   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. H&r block at home free 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. H&r block at home free   A defined benefit plan is any plan that is not a defined contribution plan. H&r block at home free Defined benefit plans include pension plans and annuity plans. H&r block at home free No vested interest. H&r block at home free   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. H&r block at home free Situations in Which You Are Not Covered by an Employer Plan Unless you are covered under another employer plan, you are not covered by an employer plan if you are in one of the situations described below. H&r block at home free Social security or railroad retirement. H&r block at home free   Coverage under social security or railroad retirement is not coverage under an employer retirement plan. H&r block at home free Benefits from a previous employer's plan. H&r block at home free   If you receive retirement benefits from a previous employer's plan, you are not covered by that plan. H&r block at home free Reservists. H&r block at home free   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. H&r block at home free You are not covered by the plan if both of the following conditions are met. H&r block at home free 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. H&r block at home free You did not serve more than 90 days on active duty during the year (not counting duty for training). H&r block at home free Volunteer firefighters. H&r block at home free   If the only reason you participate in a plan is because you are a volunteer firefighter, you may not be covered by the plan. H&r block at home free You are not covered by the plan if both of the following conditions are met. H&r block at home free 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. H&r block at home free Your accrued retirement benefits at the beginning of the year will not provide more than $1,800 per year at retirement. H&r block at home free Limit If Covered by Employer Plan 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. H&r block at home free 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. H&r block at home free These amounts vary depending on your filing status. H&r block at home free To determine if your deduction is subject to phaseout, you must determine your modified adjusted gross income (AGI) and your filing status. H&r block at home free See Filing status and Modified adjusted gross income (AGI) , later. H&r block at home free Then use Table 17-1 or 17-2 to determine if the phaseout applies. H&r block at home free Social security recipients. H&r block at home free   Instead of using Table 17-1 or Table 17-2, use the worksheets in Appendix B of Publication 590 if, for the year, all of the following apply. H&r block at home free You received social security benefits. H&r block at home free You received taxable compensation. H&r block at home free Contributions were made to your traditional IRA. H&r block at home free You or your spouse was covered by an employer retirement plan. H&r block at home free Use those worksheets to figure your IRA deduction, your nondeductible contribution, and the taxable portion, if any, of your social security benefits. H&r block at home free Deduction phaseout. H&r block at home free   If you were 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 17-1. H&r block at home free Table 17-1. H&r block at home free Effect of Modified AGI1 on Deduction if You Are Covered by 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. H&r block at home free IF your filing status is. H&r block at home free . H&r block at home free . H&r block at home free   AND your modified AGI is. H&r block at home free . H&r block at home free . H&r block at home free   THEN you can take. H&r block at home free . H&r block at home free . H&r block at home free single   or  head of household   $59,000 or less   a full deduction. H&r block at home free   more than $59,000 but less than $69,000   a partial deduction. H&r block at home free   $69,000 or more   no deduction. H&r block at home free married filing jointly   or  qualifying widow(er)   $95,000 or less   a full deduction. H&r block at home free   more than $95,000 but less than $115,000   a partial deduction. H&r block at home free   $115,000 or more   no deduction. H&r block at home free married filing separately2   less than $10,000   a partial deduction. H&r block at home free   $10,000 or more   no deduction. H&r block at home free 1Modified AGI (adjusted gross income). H&r block at home free See Modified adjusted gross income (AGI) . H&r block at home free 2If 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” column). H&r block at home free If your spouse is covered. H&r block at home free   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 17-2. H&r block at home free Filing status. H&r block at home free   Your filing status depends primarily on your marital status. H&r block at home free 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. H&r block at home free If you need more information on filing status, see chapter 2. H&r block at home free Lived apart from spouse. H&r block at home free   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. H&r block at home free Table 17-2. H&r block at home free Effect of Modified AGI1 on Deduction if You Are NOT Covered by 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. H&r block at home free IF your filing status is. H&r block at home free . H&r block at home free . H&r block at home free   AND your modified AGI is. H&r block at home free . H&r block at home free . H&r block at home free   THEN you can take. H&r block at home free . H&r block at home free . H&r block at home free single, head of household, or qualifying widow(er)   any amount   a full deduction. H&r block at home free married filing jointly or separately with a spouse who is not covered by a plan at work   any amount   a full deduction. H&r block at home free married filing jointly with a spouse who is covered by a plan at work   $178,000 or less   a full deduction. H&r block at home free   more than $178,000 but less than $188,000   a partial deduction. H&r block at home free   $188,000 or more   no deduction. H&r block at home free married filing separately with a spouse who is covered by a plan at work2   less than $10,000   a partial deduction. H&r block at home free   $10,000 or more   no deduction. H&r block at home free 1Modified AGI (adjusted gross income). H&r block at home free See Modified adjusted gross income (AGI) . H&r block at home free 2You are entitled to the full deduction if you did not live with your spouse at any time during the year. H&r block at home free Modified adjusted gross income (AGI). H&r block at home free   How you figure your modified AGI depends on whether you are filing Form 1040 or Form 1040A. H&r block at home free If you made contributions to your IRA for 2013 and received a distribution from your IRA in 2013, see Publication 590. H&r block at home free You may be able to use Worksheet 17-1 to figure your modified AGI. H&r block at home free    Do not assume that your modified AGI is the same as your compensation. H&r block at home free Your modified AGI may include income in addition to your compensation (discussed earlier), such as interest, dividends, and income from IRA distributions. H&r block at home free Form 1040. H&r block at home free   If you file Form 1040, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following eight amounts. H&r block at home free IRA deduction. H&r block at home free Student loan interest deduction. H&r block at home free Tuition and fees deduction. H&r block at home free Domestic production activities deduction. H&r block at home free Foreign earned income exclusion. H&r block at home free Foreign housing exclusion or deduction. H&r block at home free Exclusion of qualified savings bond interest shown on Form 8815, Exclusion of Interest From Series EE and I U. H&r block at home free S. H&r block at home free Savings Bonds Issued After 1989. H&r block at home free Exclusion of employer-provided adoption benefits shown on Form 8839, Qualified Adoption Expenses. H&r block at home free This is your modified AGI. H&r block at home free Form 1040A. H&r block at home free   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. H&r block at home free IRA deduction. H&r block at home free Student loan interest deduction. H&r block at home free Tuition and fees deduction. H&r block at home free Exclusion of qualified savings bond interest shown on Form 8815. H&r block at home free This is your modified AGI. H&r block at home free Both contributions for 2013 and distributions in 2013. H&r block at home free   If all three of the following apply, any IRA distributions you received in 2013 may be partly tax free and partly taxable. H&r block at home free You received distributions in 2013 from one or more traditional IRAs. H&r block at home free You made contributions to a traditional IRA for 2013. H&r block at home free Some of those contributions may be nondeductible contributions. H&r block at home free If this is your situation, you must figure the taxable part of the traditional IRA distribution before you can figure your modified AGI. H&r block at home free To do this, you can use Worksheet 1-5, Figuring the Taxable Part of Your IRA Distribution, in Publication 590. H&r block at home free   If at least one of the above does not apply, figure your modified AGI using Worksheet 17-1, later. H&r block at home free    How to figure your reduced IRA deduction. H&r block at home free   You can figure your reduced IRA deduction for either Form 1040 or Form 1040A by using the worksheets in chapter 1 of Publication 590. H&r block at home free Also, the instructions for Form 1040 and Form 1040A include similar worksheets that you may be able to use instead. H&r block at home free Worksheet 17-1. H&r block at home free Figuring Your Modified AGI Use this worksheet to figure your modified adjusted gross income for traditional IRA purposes. H&r block at home free 1. H&r block at home free Enter your adjusted gross income (AGI) from Form 1040, line 38, or Form 1040A, line 22, figured without taking into account the amount from Form 1040, line 32, or Form 1040A, line 17 1. H&r block at home free   2. H&r block at home free Enter any student loan interest deduction from Form 1040, line 33, or Form 1040A, line 18 2. H&r block at home free   3. H&r block at home free Enter any tuition and fees deduction from Form 1040, line 34, or Form 1040A, line 19 3. H&r block at home free   4. H&r block at home free Enter any domestic production activities deduction from Form 1040, line 35 4. H&r block at home free   5. H&r block at home free Enter any foreign earned income and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18 5. H&r block at home free   6. H&r block at home free Enter any foreign housing deduction from Form 2555, line 50 6. H&r block at home free   7. H&r block at home free Enter any excludable savings bond interest from Form 8815, line 14 7. H&r block at home free   8. H&r block at home free Enter any excluded employer-provided adoption benefits from Form 8839, line 28 8. H&r block at home free   9. H&r block at home free Add lines 1 through 8. H&r block at home free This is your Modified AGI for traditional IRA purposes 9. H&r block at home free   Reporting Deductible Contributions If you file Form 1040, enter your IRA deduction on line 32 of that form. H&r block at home free If you file Form 1040A, enter your IRA deduction on line 17. H&r block at home free You cannot deduct IRA contributions on Form 1040EZ. H&r block at home free Nondeductible Contributions Although your deduction for IRA contributions may be reduced or eliminated, contributions can be made to your IRA up to the general limit or, if it applies, the Kay Bailey Hutchison Spousal IRA limit. H&r block at home free The difference between your total permitted contributions and your IRA deduction, if any, is your nondeductible contribution. H&r block at home free Example. H&r block at home free Mike is 28 years old and single. H&r block at home free In 2013, he was covered by a retirement plan at work. H&r block at home free His salary was $57,312. H&r block at home free His modified AGI was $70,000. H&r block at home free Mike made a $5,500 IRA contribution for 2013. H&r block at home free Because he was covered by a retirement plan and his modified AGI was over $69,000, he cannot deduct his $5,500 IRA contribution. H&r block at home free He must designate this contribution as a nondeductible contribution by reporting it on Form 8606, as explained next. H&r block at home free Form 8606. H&r block at home free   To designate contributions as nondeductible, you must file Form 8606. H&r block at home free   You do not have to designate a contribution as nondeductible until you file your tax return. H&r block at home free When you file, you can even designate otherwise deductible contributions as nondeductible. H&r block at home free   You must file Form 8606 to report nondeductible contributions even if you do not have to file a tax return for the year. H&r block at home free 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. H&r block at home free In those situations, a Form 8606 is completed for the year you take a distribution from that IRA. H&r block at home free See Form 8606 under Distributions Fully or Partly Taxable, later. H&r block at home free Failure to report nondeductible contributions. H&r block at home free   If you do not report nondeductible contributions, all of the contributions to your traditional IRA will be treated as deductible contributions when withdrawn. H&r block at home free All distributions from your IRA will be taxed unless you can show, with satisfactory evidence, that nondeductible contributions were made. H&r block at home free Penalty for overstatement. H&r block at home free   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. H&r block at home free Penalty for failure to file Form 8606. H&r block at home free   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. H&r block at home free    Tax on earnings on nondeductible contributions. H&r block at home free   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. H&r block at home free See When Can You Withdraw or Use IRA Assets , later. H&r block at home free Cost basis. H&r block at home free   You will have a cost basis in your traditional IRA if you made any nondeductible contributions. H&r block at home free Your cost basis is the sum of the nondeductible contributions to your IRA minus any withdrawals or distributions of nondeductible contributions. H&r block at home free Inherited IRAs If you inherit a traditional IRA, you are called a beneficiary. H&r block at home free A beneficiary can be any person or entity the owner chooses to receive the benefits of the IRA after he or she dies. H&r block at home free Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive. H&r block at home free Inherited from spouse. H&r block at home free   If you inherit a traditional IRA from your spouse, you generally have the following three choices. H&r block at home free You can: Treat it as your own IRA by designating yourself as the account owner. H&r block at home free 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 (section 403(b) plan), or Deferred compensation plan of a state or local government (section 457 plan). H&r block at home free Treat yourself as the beneficiary rather than treating the IRA as your own. H&r block at home free Treating it as your own. H&r block at home free   You will be considered to have chosen to treat the IRA as your own if: Contributions (including rollover contributions) are made to the inherited IRA, or You do not take the required minimum distribution for a year as a beneficiary of the IRA. H&r block at home free You will only be considered to have chosen to treat the IRA as your own if: You are the sole beneficiary of the IRA, and You have an unlimited right to withdraw amounts from it. H&r block at home free   However, if you receive a distribution from your deceased spouse's IRA, you can roll that distribution over into your own IRA within the 60-day time limit, as long as the distribution is not a required distribution, even if you are not the sole beneficiary of your deceased spouse's IRA. H&r block at home free Inherited from someone other than spouse. H&r block at home free   If you inherit a traditional IRA from anyone other than your deceased spouse, you cannot treat the inherited IRA as your own. H&r block at home free This means that you cannot make any contributions to the IRA. H&r block at home free It also means you cannot roll over any amounts into or out of the inherited IRA. H&r block at home free However, you can make a trustee-to-trustee transfer as long as the IRA into which amounts are being moved is set up and maintained in the name of the deceased IRA owner for the benefit of you as beneficiary. H&r block at home free For more information, see the discussion of inherited IRAs under Rollover From One IRA Into Another, later. H&r block at home free Can You Move Retirement Plan Assets? You can transfer, tax free, assets (money or property) from other retirement plans (including traditional IRAs) to a traditional IRA. H&r block at home free You can make the following kinds of transfers. H&r block at home free Transfers from one trustee to another. H&r block at home free Rollovers. H&r block at home free Transfers incident to a divorce. H&r block at home free Transfers to Roth IRAs. H&r block at home free   Under certain conditions, you can move assets from a traditional IRA or from a designated Roth account to a Roth IRA. H&r block at home free You can also move assets from a qualified retirement plan to a Roth IRA. H&r block at home free See Can You Move Amounts Into a Roth IRA? under Roth IRAs, later. H&r block at home free Trustee-to-Trustee Transfer A transfer of funds in your traditional IRA from one trustee directly to another, either at your request or at the trustee's request, is not a rollover. H&r block at home free Because there is no distribution to you, the transfer is tax free. H&r block at home free Because it is not a rollover, it is not affected by the 1-year waiting period required between rollovers, discussed later under Rollover From One IRA Into Another . H&r block at home free For information about direct transfers to IRAs from retirement plans other than IRAs, see Can You Move Retirement Plan Assets? in chapter 1 and Can You Move Amounts Into a Roth IRA? in chapter 2 of Publication 590. H&r block at home free Rollovers Generally, a rollover is a tax-free distribution to you of cash or other assets from one retirement plan that you contribute (roll over) to another retirement plan. H&r block at home free The contribution to the second retirement plan is called a “rollover contribution. H&r block at home free ” Note. H&r block at home free An amount rolled over tax free from one retirement plan to another is generally includible in income when it is distributed from the second plan. H&r block at home free Kinds of rollovers to a traditional IRA. H&r block at home free   You can roll over amounts from the following plans into a traditional IRA: A traditional IRA, An employer's qualified retirement plan for its employees, A deferred compensation plan of a state or local government (section 457 plan), or A tax-sheltered annuity plan (section 403(b) plan). H&r block at home free Treatment of rollovers. H&r block at home free   You cannot deduct a rollover contribution, but you must report the rollover distribution on your tax return as discussed later under Reporting rollovers from IRAs and under Reporting rollovers from employer plans . H&r block at home free Kinds of rollovers from a traditional IRA. H&r block at home free   You may be able to roll over, tax free, a distribution from your traditional IRA into a qualified plan. H&r block at home free These plans include the federal Thrift Savings Fund (for federal employees), deferred compensation plans of state or local governments (section 457 plans), and tax-sheltered annuity plans (section 403(b) plans). H&r block at home free The part of the distribution that you can roll over is the part that would otherwise be taxable (includible in your income). H&r block at home free Qualified plans may, but are not required to, accept such rollovers. H&r block at home free Time limit for making a rollover contribution. H&r block at home free   You generally must make the rollover contribution by the 60th day after the day you receive the distribution from your traditional IRA or your employer's plan. H&r block at home free The IRS may waive the 60-day requirement where the failure to do so would be against equity or good conscience, such as in the event of a casualty, disaster, or other event beyond your reasonable control. H&r block at home free For more information, see Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. H&r block at home free Extension of rollover period. H&r block at home free   If an amount distributed to you from a traditional IRA or a qualified employer retirement plan is a frozen deposit at any time during the 60-day period allowed for a rollover, special rules extend the rollover period. H&r block at home free For more information, see Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. H&r block at home free More information. H&r block at home free   For more information on rollovers, see Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. H&r block at home free Rollover From One IRA Into Another You can withdraw, tax free, all or part of the assets from one traditional IRA if you reinvest them within 60 days in the same or another traditional IRA. H&r block at home free Because this is a rollover, you cannot deduct the amount that you reinvest in an IRA. H&r block at home free Waiting period between rollovers. H&r block at home free   Generally, if you make a tax-free rollover of any part of a distribution from a traditional IRA, you cannot, within a 1-year period, make a tax-free rollover of any later distribution from that same IRA. H&r block at home free You also cannot make a tax-free rollover of any amount distributed, within the same 1-year period, from the IRA into which you made the tax-free rollover. H&r block at home free   The 1-year period begins on the date you receive the IRA distribution, not on the date you roll it over into an IRA. H&r block at home free Example. H&r block at home free You have two traditional IRAs, IRA-1 and IRA-2. H&r block at home free You make a tax-free rollover of a distribution from IRA-1 into a new traditional IRA (IRA-3). H&r block at home free You cannot, within 1 year of the distribution from IRA-1, make a tax-free rollover of any distribution from either IRA-1 or IRA-3 into another traditional IRA. H&r block at home free However, the rollover from IRA-1 into IRA-3 does not prevent you from making a tax-free rollover from IRA-2 into any other traditional IRA. H&r block at home free This is because you have not, within the last year, rolled over, tax free, any distribution from IRA-2 or made a tax-free rollover into IRA-2. H&r block at home free Exception. H&r block at home free   For an exception for distributions from failed financial institutions, see Rollover From One IRA Into Another under Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. H&r block at home free Partial rollovers. H&r block at home free   If you withdraw assets from a traditional IRA, you can roll over part of the withdrawal tax free and keep the rest of it. H&r block at home free The amount you keep will generally be taxable (except for the part that is a return of nondeductible contributions). H&r block at home free The amount you keep may be subject to the 10% additional tax on early distributions, discussed later under What Acts Result in Penalties or Additional Taxes? . H&r block at home free Required distributions. H&r block at home free   Amounts that must be distributed during a particular year under the required distribution rules (discussed later) are not eligible for rollover treatment. H&r block at home free Inherited IRAs. H&r block at home free   If you inherit a traditional IRA from your spouse, you generally can roll it over, or you can choose to make the inherited IRA your own. H&r block at home free See Treating it as your own , earlier. H&r block at home free Not inherited from spouse. H&r block at home free   If you inherit a traditional IRA from someone other than your spouse, you cannot roll it over or allow it to receive a rollover contribution. H&r block at home free You must withdraw the IRA assets within a certain period. H&r block at home free For more information, see When Must You Withdraw Assets? in chapter 1 of Publication 590. H&r block at home free Reporting rollovers from IRAs. H&r block at home free   Report any rollover from one traditional IRA to the same or another traditional IRA on lines 15a and 15b, Form 1040, or lines 11a and 11b, Form 1040A, as follows. H&r block at home free   Enter the total amount of the distribution on Form 1040, line 15a, or Form 1040A, line 11a. H&r block at home free If the total amount on Form 1040, line 15a, or Form 1040A, line 11a, was rolled over, enter zero on Form 1040, line 15b, or Form 1040A, line 11b. H&r block at home free If the total distribution was not rolled over, enter the taxable portion of the part that was not rolled over on Form 1040, line 15b, or Form 1040A, line 11b. H&r block at home free Put “Rollover” next to Form 1040, line 15b, or Form 1040A, line 11b. H&r block at home free See your tax return instructions. H&r block at home free   If you rolled over the distribution into a qualified plan (other than an IRA) or you make the rollover in 2014, attach a statement explaining what you did. H&r block at home free Rollover From Employer's Plan Into an IRA You can roll over into a traditional 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; Annuity plan; Tax-sheltered annuity plan (section 403(b) plan); or Governmental deferred compensation plan (section 457 plan). H&r block at home free A qualified plan is one that meets the requirements of the Internal Revenue Code. H&r block at home free Eligible rollover distribution. H&r block at home free   Generally, an eligible rollover distribution is any distribution of all or part of the balance to your credit in a qualified retirement plan except the following. H&r block at home free A required minimum distribution (explained later under When Must You Withdraw IRA Assets? (Required Minimum Distributions) ). H&r block at home free A hardship distribution. H&r block at home free Any of a series of substantially equal periodic distributions paid at least once a year over: Your lifetime or life expectancy, The lifetimes or life expectancies of you and your beneficiary, or A period of 10 years or more. H&r block at home free Corrective distributions of excess contributions or excess deferrals, and any income allocable to the excess, or of excess annual additions and any allocable gains. H&r block at home free A loan treated as a distribution because it does not satisfy certain requirements either when made or later (such as upon default), unless the participant's accrued benefits are reduced (offset) to repay the loan. H&r block at home free Dividends on employer securities. H&r block at home free The cost of life insurance coverage. H&r block at home free Any nontaxable amounts that you roll over into your traditional IRA become part of your basis (cost) in your IRAs. H&r block at home free To recover your basis when you take distributions from your IRA, you must complete Form 8606 for the year of the distribution. H&r block at home free See Form 8606 under Distributions Fully or Partly Taxable, later. H&r block at home free Rollover by nonspouse beneficiary. H&r block at home free   A direct transfer from a deceased employee's qualified pension, profit-sharing, or stock bonus plan; annuity plan; tax-sheltered annuity (section 403(b)) plan; or governmental deferred compensation (section 457) plan to an IRA set up to receive the distribution on your behalf can be treated as an eligible rollover distribution if you are the designated beneficiary of the plan and not the employee's spouse. H&r block at home free The IRA is treated as an inherited IRA. H&r block at home free For more information about inherited IRAs, see Inherited IRAs , earlier. H&r block at home free Reporting rollovers from employer plans. H&r block at home free    Enter the total distribution (before income tax or other deductions were withheld) on Form 1040, line 16a, or Form 1040A, line 12a. H&r block at home free This amount should be shown in box 1 of Form 1099-R. H&r block at home free From this amount, subtract any contributions (usually shown in box 5 of Form 1099-R) that were taxable to you when made. H&r block at home free From that result, subtract the amount that was rolled over either directly or within 60 days of receiving the distribution. H&r block at home free Enter the remaining amount, even if zero, on Form 1040, line 16b, or Form 1040A, line 12b. H&r block at home free Also, enter "Rollover" next to Form 1040, line 16b, or Form 1040A, line 12b. H&r block at home free Transfers Incident to Divorce If an interest in a traditional IRA is transferred from your spouse or former spouse to you by a divorce or separate maintenance decree or a written document related to such a decree, the interest in the IRA, starting from the date of the transfer, is treated as your IRA. H&r block at home free The transfer is tax free. H&r block at home free For detailed information, see Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. H&r block at home free Converting From Any Traditional IRA to a Roth IRA Allowable conversions. H&r block at home free   You can withdraw all or part of the assets from a traditional IRA and reinvest them (within 60 days) in a Roth IRA. H&r block at home free The amount that you withdraw and timely contribute (convert) to the Roth IRA is called a conversion contribution. H&r block at home free If properly (and timely) rolled over, the 10% additional tax on early distributions will not apply. H&r block at home free However, a part or all of the conversion contribution from your traditional IRA is included in your gross income. H&r block at home free Required distributions. H&r block at home free   You cannot convert amounts that must be distributed from your traditional IRA for a particular year (including the calendar year in which you reach age 70½) under the required distribution rules (discussed later). H&r block at home free Income. H&r block at home free   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&r block at home free 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&r block at home free   You do not include in gross income any part of a distribution from a traditional IRA that is a return of your basis, as discussed later. H&r block at home free   You must file Form 8606 to report 2013 conversions from traditional, SEP, or SIMPLE IRAs to a Roth IRA in 2013 (unless you recharacterized the entire amount) and to figure the amount to include in income. H&r block at home free   If you must include any amount in your gross income, you may have to increase your withholding or make estimated tax payments. H&r block at home free See chapter 4. H&r block at home free Recharacterizations You may be able to treat a contribution made to one type of IRA as having been made to a different type of IRA. H&r block at home free This is called recharacterizing the contribution. H&r block at home free See Can You Move Retirement Plan Assets? in chapter 1 of Publication 590 for more detailed information. H&r block at home free How to recharacterize a contribution. H&r block at home free   To recharacterize a contribution, you generally must have the contribution transferred from the first IRA (the one to which it was made) to the second IRA in a trustee-to-trustee transfer. H&r block at home free If the transfer is made by the due date (including extensions) for your tax return for the year during which the contribution was made, you can elect to treat the contribution as having been originally made to the second IRA instead of to the first IRA. H&r block at home free If you recharacterize your contribution, you must do all three of the following. H&r block at home free Include in the transfer any net income allocable to the contribution. H&r block at home free If there was a loss, the net income you must transfer may be a negative amount. H&r block at home free Report the recharacterization on your tax return for the year during which the contribution was made. H&r block at home free Treat the contribution as having been made to the second IRA on the date that it was actually made to the first IRA. H&r block at home free No deduction allowed. H&r block at home free   You cannot deduct the contribution to the first IRA. H&r block at home free Any net income you transfer with the recharacterized contribution is treated as earned in the second IRA. H&r block at home free Required notifications. H&r block at home free   To recharacterize a contribution, you must notify both the trustee of the first IRA (the one to which the contribution was actually made) and the trustee of the second IRA (the one to which the contribution is being moved) that you have elected to treat the contribution as having been made to the second IRA rather than the first. H&r block at home free You must make the notifications by the date of the transfer. H&r block at home free Only one notification is required if both IRAs are maintained by the same trustee. H&r block at home free The notification(s) must include all of the following information. H&r block at home free The type and amount of the contribution to the first IRA that is to be recharacterized. H&r block at home free The date on which the contribution was made to the first IRA and the year for which it was made. H&r block at home free A direction to the trustee of the first IRA to transfer in a trustee-to-trustee transfer the amount of the contribution and any net income (or loss) allocable to the contribution to the trustee of the second IRA. H&r block at home free The name of the trustee of the first IRA and the name of the trustee of the second IRA. H&r block at home free Any additional information needed to make the transfer. H&r block at home free Reporting a recharacterization. H&r block at home free   If you elect to recharacterize a contribution to one IRA as a contribution to another IRA, you must report the recharacterization on your tax return as directed by Form 8606 and its instructions. H&r block at home free You must treat the contribution as having been made to the second IRA. H&r block at home free When Can You Withdraw or Use IRA Assets? There are rules limiting use of your IRA assets and distributions from it. H&r block at home free Violation of the rules generally results in additional taxes in the year of violation. H&r block at home free See What Acts Result in Penalties or Additional Taxes , later. H&r block at home free Contributions returned before the due date of return. H&r block at home free   If you made IRA contributions in 2013, you can withdraw them tax free by the due date of your return. H&r block at home free If you have an extension of time to file your return, you can withdraw them tax free by the extended due date. H&r block at home free You can do this if, for each contribution you withdraw, both of the following conditions apply. H&r block at home free You did not take a deduction for the contribution. H&r block at home free You withdraw any interest or other income earned on the contribution. H&r block at home free You can take into account any loss on the contribution while it was in the IRA when calculating the amount that must be withdrawn. H&r block at home free If there was a loss, the net income earned on the contribution may be a negative amount. H&r block at home free Note. H&r block at home free To calculate the amount you must withdraw, see Worksheet 1-4 under When Can You Withdraw or Use Assets? in chapter 1 of Publication 590. H&r block at home free Earnings includible in income. H&r block at home free   You must include in income any earnings on the contributions you withdraw. H&r block at home free Include the earnings in income for the year in which you made the contributions, not in the year in which you withdraw them. H&r block at home free Generally, except for any part of a withdrawal that is a return of nondeductible contributions (basis), any withdrawal of your contributions after the due date (or extended due date) of your return will be treated as a taxable distribution. H&r block at home free Excess contributions can also be recovered tax free as discussed under What Acts Result in Penalties or Additional Taxes?, later. H&r block at home free    Early distributions tax. H&r block at home free   The 10% additional tax on distributions made before you reach age 59½ does not apply to these tax-free withdrawals of your contributions. H&r block at home free However, the distribution of interest or other income must be reported on Form 5329 and, unless the distribution qualifies as an exception to the age 59½ rule, it will be subject to this tax. H&r block at home free When Must You Withdraw IRA Assets? (Required Minimum Distributions) You cannot keep funds in a traditional IRA indefinitely. H&r block at home free Eventually they must be distributed. H&r block at home free If there are no distributions, or if the distributions are not large enough, you may have to pay a 50% excise tax on the amount not distributed as required. H&r block at home free See Excess Accumulations (Insufficient Distributions) , later. H&r block at home free The requirements for distributing IRA funds differ depending on whether you are the IRA owner or the beneficiary of a decedent's IRA. H&r block at home free Required minimum distribution. H&r block at home free   The amount that must be distributed each year is referred to as the required minimum distribution. H&r block at home free Required distributions not eligible for rollover. H&r block at home free   Amounts that must be distributed (required minimum distributions) during a particular year are not eligible for rollover treatment. H&r block at home free IRA owners. H&r block at home free   If you are the owner of a traditional IRA, you must generally start receiving distributions from your IRA by April 1 of the year following the year in which you reach age 70½. H&r block at home free April 1 of the year following the year in which you reach age 70½ is referred to as the required beginning date. H&r block at home free Distributions by the required beginning date. H&r block at home free   You must receive at least a minimum amount for each year starting with the year you reach age 70½ (your 70½ year). H&r block at home free If you do not (or did not) receive that minimum amount in your 70½ year, then you must receive distributions for your 70½ year by April 1 of the next year. H&r block at home free   If an IRA owner dies after reaching age 70½, but before April 1 of the next year, no minimum distribution is required because death occurred before the required beginning date. H&r block at home free Even if you begin receiving distributions before you attain age 70½, you must begin calculating and receiving required minimum distributions by your required beginning date. H&r block at home free Distributions after the required beginning date. H&r block at home free   The required minimum distribution for any year after the year you turn 70½ must be made by December 31 of that later year. H&r block at home free    Beneficiaries. H&r block at home free   If you are the beneficiary of a decedent's traditional IRA, the requirements for distributions from that IRA generally depend on whether the IRA owner died before or after the required beginning date for distributions. H&r block at home free More information. H&r block at home free   For more information, including how to figure your minimum required distribution each year and how to figure your required distribution if you are a beneficiary of a decedent's IRA, see When Must You Withdraw Assets? in chapter 1 of Publication 590. H&r block at home free Are Distributions Taxable? In general, distributions from a traditional IRA are taxable in the year you receive them. H&r block at home free Exceptions. H&r block at home free   Exceptions to distributions from traditional IRAs being taxable in the year you receive them are: Rollovers, Qualified charitable distributions (QCD), discussed later, Tax-free withdrawals of contributions, discussed earlier, and The return of nondeductible contributions, discussed later under Distributions Fully or Partly Taxable . H&r block at home free    Although a conversion of a traditional IRA is considered a rollover for Roth IRA purposes, it is not an exception to the rule that distributions from a traditional IRA are taxable in the year you receive them. H&r block at home free Conversion distributions are includible in your gross income subject to this rule and the special rules for conversions explained in Converting From Any Traditional IRA Into a Roth IRA under Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. H&r block at home free Qualified charitable distributions (QCD). H&r block at home free   A QCD is generally a nontaxable distribution made directly by the trustee of your IRA to an organization eligible to receive tax-deductible contributions. H&r block at home free Special rules apply if you made a qualified charitable distribution in January 2013 that you elected to treat as made in 2012. H&r block at home free See Qualified Charitable Distributions in Publication 590 for more information. H&r block at home free Ordinary income. H&r block at home free   Distributions from traditional IRAs that you include in income are taxed as ordinary income. H&r block at home free No special treatment. H&r block at home free   In figuring your tax, you cannot use the 10-year tax option or capital gain treatment that applies to lump-sum distributions from qualified retirement plans. H&r block at home free Distributions Fully or Partly Taxable Distributions from your traditional IRA may be fully or partly taxable, depending on whether your IRA includes any nondeductible contributions. H&r block at home free Fully taxable. H&r block at home free   If only deductible contributions were made to your traditional IRA (or IRAs, if you have more than one), you have no basis in your IRA. H&r block at home free Because you have no basis in your IRA, any distributions are fully taxable when received. H&r block at home free See Reporting taxable distributions on your return , later. H&r block at home free Partly taxable. H&r block at home free    If you made nondeductible contributions or rolled over any after-tax amounts to any of your traditional IRAs, you have a cost basis (investment in the contract) equal to the amount of those contributions. H&r block at home free These nondeductible contributions are not taxed when they are distributed to you. H&r block at home free They are a return of your investment in your IRA. H&r block at home free   Only the part of the distribution that represents nondeductible contributions and rolled over after-tax amounts (your cost basis) is tax free. H&r block at home free If nondeductible contributions have been made or after-tax amounts have been rolled over to your IRA, distributions consist partly of nondeductible contributions (basis) and partly of deductible contributions, earnings, and gains (if there are any). H&r block at home free Until all of your basis has been distributed, each distribution is partly nontaxable and partly taxable. H&r block at home free Form 8606. H&r block at home free   You must complete Form 8606 and attach it to your return if you receive a distribution from a traditional IRA and have ever made nondeductible contributions or rolled over after-tax amounts to any of your traditional IRAs. H&r block at home free Using the form, you will figure the nontaxable distributions for 2013 and your total IRA basis for 2013 and earlier years. H&r block at home free Note. H&r block at home free If you are required to file Form 8606, but you are not required to file an income tax return, you still must file Form 8606. H&r block at home free Send it to the IRS at the time and place you would otherwise file an income tax return. H&r block at home free Distributions reported on Form 1099-R. H&r block at home free   If you receive a distribution from your traditional IRA, you will receive Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. H&r block at home free , or a similar statement. H&r block at home free IRA distributions are shown in boxes 1 and 2a of Form 1099-R. H&r block at home free A number or letter code in box 7 tells you what type of distribution you received from your IRA. H&r block at home free Withholding. H&r block at home free   Federal income tax is withheld from distributions from traditional IRAs unless you choose not to have tax withheld. H&r block at home free See chapter 4. H&r block at home free IRA distributions delivered outside the United States. H&r block at home free   In general, if you are a U. H&r block at home free S. H&r block at home free citizen or resident alien and your home address is outside the United States or its possessions, you cannot choose exemption from withholding on distributions from your traditional IRA. H&r block at home free Reporting taxable distributions on your return. H&r block at home free    Report fully taxable distributions, including early distributions on Form 1040, line 15b, or Form 1040A, line 11b (no entry is required on Form 1040, line 15a, or Form 1040A, line 11a). H&r block at home free If only part of the distribution is taxable, enter the total amount on Form 1040, line 15a, or Form 1040A, line 11a, and the taxable part on Form 1040, line 15b, or Form 1040A, line 11b. H&r block at home free You cannot report distributions on Form 1040EZ. H&r block at home free What Acts Result in Penalties or Additional Taxes? The tax advantages of using traditional IRAs for retirement savings can be offset by additional taxes and penalties if you do not follow the rules. H&r block at home free There are additions to the regular tax for using your IRA funds in prohibited transactions. H&r block at home free There are also additional taxes for the following activities. H&r block at home free Investing in collectibles. H&r block at home free Making excess contributions. H&r block at home free Taking early distributions. H&r block at home free Allowing excess amounts to accumulate (failing to take required distributions). H&r block at home free There are penalties for overstating the amount of nondeductible contributions and for failure to file a Form 8606, if required. H&r block at home free Prohibited Transactions Generally, a prohibited transaction is any improper use of your traditional IRA by you, your beneficiary, or any disqualified person. H&r block at home free Disqualified persons include your fiduciary and members of your family (spouse, ancestor, lineal descendent, and any spouse of a lineal descendent). H&r block at home free The following are examples of prohibited transactions with a traditional IRA. H&r block at home free Borrowing money from it. H&r block at home free Selling property to it. H&r block at home free Receiving unreasonable compensation for managing it. H&r block at home free Using it as security for a loan. H&r block at home free Buying property for personal use (present or future) with IRA funds. H&r block at home free Effect on an IRA account. H&r block at home free   Generally, if you or your beneficiary engages in a prohibited transaction in connection with your traditional IRA account at any time during the year, the account stops being an IRA as of the first day of that year. H&r block at home free Effect on you or your beneficiary. H&r block at home free   If your account stops being an IRA because you or your beneficiary engaged in a prohibited transaction, the account is treated as distributing all its assets to you at their fair market values on the first day of the year. H&r block at home free If the total of those values is more than your basis in the IRA, you will have a taxable gain that is includible in your income. H&r block at home free For information on figuring your gain and reporting it in income, see Are Distributions Taxable , earlier. H&r block at home free The distribution may be subject to additional taxes or penalties. H&r block at home free Taxes on prohibited transactions. H&r block at home free   If someone other than the owner or beneficiary of a traditional IRA engages in a prohibited transaction, that person may be liable for certain taxes. H&r block at home free In general, there is a 15% tax on the amount of the prohibited transaction and a 100% additional tax if the transaction is not corrected. H&r block at home free More information. H&r block at home free   For more information on prohibited transactions, see What Acts Result in Penalties or Additional Taxes? in chapter 1 of Publication 590. H&r block at home free Investment in Collectibles If your traditional IRA invests in collectibles, the amount invested is considered distributed to you in the year invested. H&r block at home free You may have to pay the 10% additional tax on early distributions, discussed later. H&r block at home free Collectibles. H&r block at home free   These include: Artworks, Rugs, Antiques, Metals, Gems, Stamps, Coins, Alcoholic beverages, and Certain other tangible personal property. H&r block at home free Exception. H&r block at home free    Your IRA can invest in one, one-half, one-quarter, or one-tenth ounce U. H&r block at home free S. H&r block at home free gold coins, or one-ounce silver coins minted by the Treasury Department. H&r block at home free It can also invest in certain platinum coins and certain gold, silver, palladium, and platinum bullion. H&r block at home free Excess Contributions Generally, an excess contribution is the amount contributed to your traditional IRA(s) for the year that is more than the smaller of: The maximum deductible amount for the year. H&r block at home free For 2013, this is $5,500 ($6,500 if you are 50 or older), or Your taxable compensation for the year. H&r block at home free Tax on excess contributions. H&r block at home free   In general, if the excess contributions for a year are not withdrawn by the date your return for the year is due (including extensions), you are subject to a 6% tax. H&r block at home free You must pay the 6% tax each year on excess amounts that remain in your traditional IRA at the end of your tax year. H&r block at home free The tax cannot be more than 6% of the combined value of all your IRAs as of the end of your tax year. H&r block at home free Excess contributions withdrawn by due date of return. H&r block at home free   You will not have to pay the 6% tax if you withdraw an excess contribution made during a tax year and you also withdraw interest or other income earned on the excess contribution. H&r block at home free You must complete your withdrawal by the date your tax return for that year is due, including extensions. H&r block at home free How to treat withdrawn contributions. H&r block at home free   Do not include in your gross income an excess contribution that you withdraw from your traditional IRA before your tax return is due if both the following conditions are met. H&r block at home free No deduction was allowed for the excess contribution. H&r block at home free You withdraw the interest or other income earned on the excess contribution. H&r block at home free You can take into account any loss on the contribution while it was in the IRA when calculating the amount that must be withdrawn. H&r block at home free If there was a loss, the net income you must withdraw may be a negative amount. H&r block at home free How to treat withdrawn interest or other income. H&r block at home free   You must include in your gross income the interest or other income that was earned on the excess contribution. H&r block at home free Report it on your return for the year in which the excess contribution was made. H&r block at home free Your withdrawal of interest or other income may be subject to an additional 10% tax on early distributions, discus