Important Reminders

IRA interest earned. Although interest earned from your IRA is generally not taxed in the year earned, it is not tax-exempt interest. Do not report this interest on your return as tax-exempt interest.

Penalty for failure to file Form 8606. If you make nondeductible contributions to a traditional IRA and you do not file Form 8606, Nondeductible IRAs, with your tax return, you may have to pay a $50 penalty.

Contributions to spousal IRAs. In the case of a married couple filing a joint return, up to $2,000 can be contributed to IRAs (other than SIMPLE and education IRAs) on behalf of each spouse, even if one spouse has little or no compensation. See Spousal IRA limit under How Much Can Be Contributed? in chapter 1.

Spouse covered by employer plan. If you are not covered by an employer retirement plan and you file a joint return, you may be able to deduct all of your contributions to a traditional IRA even if your spouse is covered by a plan.

See How Much Can I Deduct? in chapter 1.

No additional tax on early distributions from traditional or Roth IRAs for higher education expenses. You can take distributions from your traditional or Roth IRA for qualified higher education expenses without having to pay the 10% additional tax on early distributions.

For traditional IRAs, see Higher education expenses under Age 59 1/2 Rule in chapter 1.

For Roth IRAs, see Additional Tax on Early Distributions under What Distributions Are Not Qualified Distributions in chapter 2.

No additional tax on early distributions from traditional or Roth IRAs for first home. You can take distributions of up to $10,000 from your traditional or Roth IRA to buy, build, or rebuild a first home without having to pay the 10% additional tax on early distributions.

For traditional IRAs, see First home under Age 59 1/2 Rule in chapter 1. For Roth IRAs, see What Are Qualified Distributions? in chapter 2.

Roth IRA. You may be able to establish and contribute to a Roth IRA. You cannot claim a deduction for any contributions to a Roth IRA. But, if you satisfy the requirements, all earnings are tax free and neither your nondeductible contributions nor any earnings on them are taxable when you withdraw them. See chapter 2.

Education IRA. You may be able to make nondeductible contributions of up to $500 annually to an education IRA for a child under age 18. Earnings in the IRA accumulate free of income tax. See chapter 3.

Previous| First | Next

Publication Index | IRS-Forms Main | Home