7 IRA Questions to Ask Before You File Your Return

Monday, March 20, 2017
By Jeffrey Levine, Director of Retirement Education 
Follow Me on Twitter: @IRAGuru4EdSlott
 

1) Did you make a deductible IRA contribution for 2016?

If yes, make sure the deduction is reflected on line 32 of your Form 1040.

2) Did you make a non-deductible IRA contribution for 2016?

If yes, make sure the contribution is reported on Form 8606. The contribution will not, however, be reported anywhere on your Form 1040. If you don’t file Form 8606, you could end up paying tax on the same money twice when you take IRA distributions in the future.

3) Did you make a Roth IRA contribution for 2016?

If yes, be sure to keep a record of the contribution someplace safe. The contribution is not actually reported on your Form 1040, or anywhere else on your tax return for that matter. Knowing your total Roth IRA contributions could come in handy in the future if you have to prematurely tap your Roth IRA. Roth IRA contributions can always be distributed tax and penalty free; at any time, for any reason, and at any age.

4) Did you make a Roth IRA conversion from an IRA?

If yes, make sure that the conversion is properly reported on Form 8606.

5) Did you make an IRA-to-IRA rollover?

If yes, make sure that the amount you took out of the distributing IRA is reported on line 15a of your Form 1040. And just as important, make sure that the amount rolled over isn’t reported on line 15b! Next to line 15b, you should write “Rollover” to explain the difference.

6) Did you make a Qualified Charitable Distribution (QCD) in 2016?

If yes, make sure that the amount you took out of the distributing IRA is reported on line 15a of your Form 1040. And just as important, make sure that amount isn’t reported on line 15b! Next to line 15b, you should write “QCD” to explain the difference. Also, don’t forget that you cannot deduct this amount as a charitable contribution itemized deduction.

7) Did you forget to take an RMD for 2016?

If yes, immediately take the missed RMD and file Form 5329 to report the error and ask for a waiver of the 50% penalty. You should also attach a note provided reasonable cause for your error.

 

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