tax returns IRA withdraws
my iras information was not put in on my tax return the last two years. it was reported on a early return. I did not more or change my iras. #1 do i need to have this info on each tax return yearly? #2 if so do i need to file adjusted return for one or both for 08 and 09? #3what should i do for the coming tax year, how should i add this ira info on the 2010 return or not?#4 what do i do to avoid paying penalties when i start to withdraw funds? I am over 60 of age. they are not roth they are reg type and i know i will play taxes on the interest when i do withdraw any money.# can i withdraw one ira at a time? please help I am limited on living funds and very panicky thanks, please email all answers Barbara, [email protected]
Permalink Submitted by Alan Spross on Sat, 2010-08-21 18:59
Yes, you do have to report your traditional IRA contribution on your tax return.
1) If you can deduct the contribution, you can file an amended return for each year and will receive a refund. To qualify for the deduction, your income cannot be too high if you are were covered by a retirement plan at work.
2) If your income is too high to deduct the contribution, then you need to file Form 8606 to report a non deductible contribution. This prevents you from being taxed again on these funds when your take distributions. Form 8606 can be filed by itself without an amended return because it will not change your current taxes for those years.
You can take distributions separately from your IRAs if you have more than one. You MUST start taking required distributions in the year you reach 70.5. Unless you made non deductible contributions and filed Form 8606 for any years since 1987, all your distributions will be taxable.
Therefore, you must determine if you can deduct the contributions or not. If you were covered by a retirement plan at work, the retirement plan box will be checked on your W-2. If this box is checked then your modified AGI cannot exceed 55,000 if you are single (2009 amount). Look at the AGI line on your tax returns. If it is quite a bit less than 55,000,then you can deduct your contributions. If you are married, then the 55,000 becomes 89,000.
Please advise any further questions, and this is complex so you probably do need more answers.
Permalink Submitted by barb dillard on Sat, 2010-08-21 19:33
hello again, the iras where from earlier years. so they 5 years held.i did not contribute any in 08 or 09. so did i need to report anything on my return for those years? sorry, i didn’t explain myself to well. thanks Barbara
Permalink Submitted by Alan Spross on Sat, 2010-08-21 20:22
Then there is no problem with your returns. You do not report anything about your IRA on your tax return unless you either contribute to the IRA or take a distribution from the IRA for a particular year. The 5 year period does not matter here since that only applies to Roth IRAs and you indicated these are traditional IRAs.
If you need distributions in the future, they will be subject to tax on the entire amount you take out unless you did make non deductible contributions in some prior year, but since you are over 59.5, there is no longer any early withdrawal penalty. You can take any number of small distributions from your IRAs, so it is better to take out money only as you need it.