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Hi,

I did my taxes using H&R At Home Deluxe software. Earlier today I had put 10k (5K each in mine and wife account) in Roth IRA for year 2010. We do qualify for Roth IRA contribution to max.

I have already submitted my return (owing 2K) to IRS but forgot to declare Roth IRA contribution!

Later this year, I might have need to remove the principle amount from my Roth IRA account(s) for possible down payment on home purchase.

Now I am wondering if I made a mistake? I think Roth IRA does not get mentioned anywhere on form 1040 but now I am wondering if
I need to amend the return? what happens to future gain on the contribution?

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Amend your return. It's not going to change your taxes owed since it's a Roth, and you'll cover your bases.

It definitely needs to be declared, so why not just do it right now and save yourself a possible big headache later?

ensignlee said:   Amend your return. It's not going to change your taxes owed since it's a Roth, and you'll cover your bases.

It definitely needs to be declared, so why not just do it right now and save yourself a possible big headache later?
Why do you think it needs to be declared now? There is no form to report Roth contributions on that gets sent to the IRS with a 1040 unless you have an excess contribution. There is nothing for OP to tell the IRS.

OP, the only thing that you need to do is maintain a record of your contributions by year into your Roth IRA so that later when you take distributions out, you can track the amount of contributions you can remove (ie: amount not subject to penalty).

theman2 said:   ensignlee said:   Amend your return. It's not going to change your taxes owed since it's a Roth, and you'll cover your bases.

It definitely needs to be declared, so why not just do it right now and save yourself a possible big headache later?
Why do you think it needs to be declared now? There is no form to report Roth contributions on that gets sent to the IRS with a 1040 unless you have an excess contribution. There is nothing for OP to tell the IRS.

OP, the only thing that you need to do is maintain a record of your contributions by year into your Roth IRA so that later when you take distributions out, you can track the amount of contributions you can remove (ie: amount not subject to penalty).


ORLY? I stand corrected then. I just assumed that since the tax software asked me if I contributed to one, it got filled out on a form somewhere. That, plus I assumed the custodians would report that info the IRS as well.

Actually wait, how does the IRS track if you made excess contributions if brokers don't send that info to the IRS?

Found some useful link
Roth IRA Form 8606
Roth IRA

ensignlee said:   Amend your return. It's not going to change your taxes owed since it's a Roth, and you'll cover your bases.

It definitely needs to be declared, so why not just do it right now and save yourself a possible big headache later?


i did some search and seems like there is no place to put Roth IRA on 1040!

I'm with the FWers here who say a normal Roth IRA contribution doesn't need to be reported on your 1040 Individual Federal Return. The only time I reported such a contribution was when I made the contribution for 2006 in January 2006 which later turned out to be excess because of some unexpected income which hit my return in the 2nd half of that year. I didn't understand or realize the excess Roth thing until March-April 2007 & got hooked by it.

BTW the IRS has a lousy formula for figuring how much earnings are associated with the excess contribution. Ended up having earnings from prior years attributed to the 2006 contribution ; thus had to pay tax and some penalty on some arbitrary inflated untrue amount. I'm determined not to let that happen again.

I've since made my Roth contributions for both 2009 & 2010 because my income was under the AGI threshold. But now I wait until I'm sure income won't exceed the AGI threshold. e.g. I made my 2010 contribution April 15, 2011.

If you are referring to the IRA deduction line of Form 1040 or Form 8606, they normally don't apply for "regular" Roth IRA contributions. You would think it would appear somewhere on the return, but not in this case. Technically, Form 5498 will report your Roth IRA to the IRS (you don't file that form).

From 5 days ago:
http://www.fatwallet.com/forums/finance/1089801/

Does anybody search anymore?

You should get a 5498 from the company that took the contribution. Keep that for your records as that is what the IRS is getting.

WoozyMoose said:   I've since made my Roth contributions for both 2009 & 2010 because my income was under the AGI threshold. But now I wait until I'm sure income won't exceed the AGI threshold. e.g. I made my 2010 contribution April 15, 2011.You can just contribute the full amount to a traditional IRA (it's not deductible but that doesn't matter), and then convert to Roth IRA (there's no longer an income limit for conversions). It does create more paperwork (opening the traditional IRA, converting it, and reporting both the contribution and the conversion on your tax return).

govenar said:   WoozyMoose said:   I've since made my Roth contributions for both 2009 & 2010 because my income was under the AGI threshold. But now I wait until I'm sure income won't exceed the AGI threshold. e.g. I made my 2010 contribution April 15, 2011.You can just contribute the full amount to a traditional IRA (it's not deductible but that doesn't matter), and then convert to Roth IRA (there's no longer an income limit for conversions). It does create more paperwork (opening the traditional IRA, converting it, and reporting both the contribution and the conversion on your tax return).

You can also contribute to a TIRA early and then if you qualify for a Roth, just recharacterize it.......the end result is just like you contributed to a Roth from the start.
You just need a brief narrative in your tax return to explain what happened. If it turns out, you don't qualify for the Roth, you can go the Roth conversion route w/ some additional tax reporting.

ensignlee said:   ORLY? I stand corrected then. I just assumed that since the tax software asked me if I contributed to one, it got filled out on a form somewhere. That, plus I assumed the custodians would report that info the IRS as well.

Actually wait, how does the IRS track if you made excess contributions if brokers don't send that info to the IRS?
To the best of my knowledge, the reason it's in the tax software is due to the savers credit

Yes, the tax software would ask about any Roth IRA contributions to calculate potential Retirement Savings Contributions Credit.

Thanks everyone!



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