Last Updated : January 14, 2009
  AutoEfile Home  Sitemap  Contact us   Print this page  Bookmark this page
Call for Support : 732.606.4476 7326988881 - SUPPORT
8606

Form 8606

Nondeductible IRAs

Purpose of Form:
Use Form 8606 to report:

  • Nondeductible contributions to traditional IRAs,
  • Distributions from traditional, SEP, or SIMPLE IRAs, if have ever made nondeductible contributions to traditional IRAs,
  • Distributions from Roth IRAs, and
  • Conversions from traditional, SEP, or SIMPLE IRAs to Roth IRAs.

Who Must File:
File form 8606 if any of the following apply.

  • Taxpayer made nondeductible contributions to a traditional IRAs for tax year.
  • Taxpayer received distributions from a traditional, SEP, or SIMPLE IRA in tax year and his/her basis in traditional IRAs is more than zero.
  • Taxpayer converted an amount from traditional, SEP, or SIMPLE IRA to a Roth IRA in tax year (unless he/she recharacterized the entire conversion).
  • Taxpayer received distributions form a Roth IRA in tax year (other than a rollover, recharacterization, or return of certain contributions).

Part I – Nondeductible Contributions to Traditional IRAs and Distributions Form Traditional, SEP, and Simple IRAs

Complete this part only if one or more of the following apply;

  • Taxpayer made nondeductible contributions to a traditional IRA for 2006.
  • Taxpayer took distributions from a traditional, SEP, or SIMPLE IRA in 2006 and he/she made nondeductible contributions to a traditional IRA in current tax year or an earlier year.
  • Taxpayer converted part, but not all, of his/her traditional, SEP, and SIMPLE IRAs to Roth IRAs in current tax year and he/she made nondeductible contributions to a traditional IRA in current tax year or in earlier year.

Line 1: Nondeductible contributions to Traditional IRAs
Amount flows on this line form IRA Worksheet line 12.

Line 2: Total Basis in Traditional IRAs
If taxpayer is filing for the first time Form 8606 Enter 0 .Otherwise refer to the instructions of PDF of Form 8606 part-1 line 2 for more detailed information.

Line 3:
Add Line 1 And Line 2 of part-1 

Line 4 :
If you made contributions to traditional IRAs for 2006 in 2006 and 2007 and you have both deductible and non deductible contributions , you can choose to treat the Contributions made in 2006 first as non deductible contributions and then as deductible contributions or vice-versa . But the amount on line 4 cannot be less than the excess, if any of the amount on line 1 over the contributions you actually made in 2006.

 Although the contributions to traditional IRAs for 2006 that were made from January 2007 through April 2007 can be treated as non deductible , they are not included in figuring the non taxable part of any distributions you received in 2006.

Line 5 :
Subtract line 4 from line 3.

Line 6 :
Enter the total value of all your traditional , SEP and SIMPLE IRAs as of 31st December 2006 including any outstanding rollovers, recharacterizations made . Also include any Qualified Distributions you repaid before March1 2007, if the distributions were to be used to purchase or construct a main home in the Hurricane Katrina, Rita or Wilma disaster area but that home was not purchased or constructed because of  such disasters. Also exclude the total amount of repayments of Qualified Hurricane distributions made by you in 2006.If the result is Zero or less  enter zero.

Line 7 :
This is the sum of the gross amount of all traditional , SEP ,and SIMPLE IRA distributions . Following are to be excluded before entering the amount on line 7 . They are :

  • Distributions that are converted to a ROTH IRA.
  • Recharacterizations.
  • Distributions that are rolled over during the year and any outstanding rollovers included on line 6.
  • Distributions rolled over by you to a Qualified Employer Plan.
  • Distributions that are treated as a return of contributions under return of IRA contributions.
  • Distributions that are treated as a return of excess contributions.
  • Distributions of excess contributions due to incorrect rollover information.
  • Distributions that is incident to Divorce.
  • Qualified Distributions that are repaid before March if such distributions were to be used to purchase or construct the house.

Line 8 :
If in 2006 you converted any amounts from Traditional , SEP or SIMPLE IRAs to a Roth IRA, Enter the net amount converted by you. To figure the net amount exclude any recharacterizations or any loss that occurred while the amount was in Roth IRA.

Line 9 :
Add lines 6 , line 7 and line 8 .

Line 10 :
Divide line 5 by Line 9 . calculate the result upto 3 decimal places.

Line 11 :
Multiply line 8 by line 10. The result is the non taxable portion of the amount of Conversion to ROTH IRA.

Line 12 :
Multiply line 7 by line 10 .The result is the non taxable portion of the amount that Was not converted to Roth IRA.

Line 13 :
Add line 11 and line 12 .

Line 14 :
Subtract Line 13 From Line 3 .

Line 15a :
Subtract line 12 from line 7.

Line 15b :
If all your distributions are qualified Hurricane distributions , enter the amount from Line 15a on line 15b. if the distributions are not qualified Hurricane distributions then It will be allowed proportionately by multiplying total distributions and amount on line 15a And dividing the result by line 7 of form 8606 . The result obtained will be shown on form 8915,line 13 also.

Line 15c:
Subtract line 15b from line 15a. here the taxpayer may be subject to an additional 10% tax If line 15c > 0 and the age of taxpayer is 59 ½ at the time of distribution.

Part II – 2006 Conversions From Traditional, SEP, or SIMPLE IRAs to Roth IRAs.
 
Complete part-II if you converted part or all of your traditional , SEP or Simple IRAs to a ROTH IRA in 2006 , excluding any portion you recharacterised.

If you converted an amount from a traditional , SEP, or SIMPLE IRA to a ROTH IRA in 2006 and then recharacterised the amount back to a traditional, SEP , or SIMPLE IRA you cannot reconvert that amount until the later of January 1 , 2007 or 30 days after the recharacterisation. For more details refer publication 590.

CAUTION: please take into consideration the AGI of taxpayer ( Adjusted Gross Income) as well as the filing status  to determine the exact amount of conversation.

Line 16 :
If you completed Part-I then amount will flow from Part-I line 8 . else enter the amount on this line that you would enter on line 8 had you completed line 8 of Part-I.

Line 17 :
If  you did not complete line 11, enter on line 17 the amount from line 2 ( or the amount you would have entered on line 2 if you had completed that line ) plus any contributions iIncluded on line 1 that you made before the conversion.

PART-III Distributions From ROTH IRAs.

Complete Part-III to figure the taxable part , if any of your 2006 Roth IRA Distributions.

Line 19 :
Exclude the following items while computing the figure of line 19.

  • Distributions that you rolled over inclusing distributions in 2006 and outstanding Rollovers.
  • Recharacterizations.
  • Distributions that are return of IRA contributions.
  • Distributions made on or after age 59 ½  if you made a contribution for 1998, 1999, or 2000.
  • Distributions made upon death or due to disability if you made a contribution for 1998 , 1999 or 2000 including a conversion.
  • Distributions incident to divorce. For further details see instructions of Form.
  • Repayment of Qualiifed Distributions.

If, after considering the items above , you do not have an amount to enter on Line 19, Donot complete Part-III as your Roth IRA distribution is not taxable

Line 20 :
If you had a Qualified first-time homebuyer distribution from your Roth IRA and you made a contribution ( including a conversion ) to a Roth IRA for 1998 or 1999 , enter the amount of your qualified first-time homebuyer expenses on line 20, but donot enter more than $10000.

Line 22 :
Follow the following  to figure the amount on line 22 .

  • If you did not take any distribution before 2006  other than recharacterization or return contribution enter the total of your all regular contributions adjusting rollovers, recharacterizations , return  contributions.
  • In case any distribution is taken by you then refer to further instructions of the form to give effect to the adjustments.

Line 23 :
Generally, there is an additional 10% tax on 2006 distributions  shown on this line but the additional tax is figured on form 5329 Part I .( For calculation of tax refer form 5329)

Line 24 :
Figure the amount to enter on line 24 as follows :

  • If you never made a Roth Ira conversion , enter 0 on line 24 .
  • If you took a ROTH IRA distribution before 2006 , enter on line 24 the total of all your conversions to Roth IRAs excluding recharacterizations.
  • Increase or decrease the amount on line 24 by any basis transferred or received incident to Divorce.

Line 25b:
If all your distributions are qualified Hurricane distributions , enter the amount from Line 25a on line 25b. if the distributions are not qualified Hurricane distributions then it will be allowed proportionately by multiplying total distributions and amount on line 25a and dividing the result by line 21 of form 8606. The result obtained will be shown on form 8915,line 22 also.

Supported States

Supported States

Federal CA CO CT GA
IL MD MI NC NM NJ
NY OH PA SC VT
     

Authorized IRS E-file Provider

Checkout with PayPal - FAST, EASY and SECURE