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H and r block free file online 1. H and r block free file online   Traditional IRAs Table of Contents What's New for 2013 What's New for 2014 Introduction Who Can Open a Traditional IRA?What Is Compensation? When Can a Traditional IRA Be Opened? How Can a Traditional IRA Be Opened?Individual Retirement Account Individual Retirement Annuity Individual Retirement Bonds Simplified Employee Pension (SEP) Employer and Employee Association Trust Accounts Required Disclosures How Much Can Be Contributed?Limit. H and r block free file online When repayment contributions can be made. H and r block free file online No deduction. H and r block free file online Reserve component. H and r block free file online Figuring your IRA deduction. H and r block free file online Reporting the repayment. H and r block free file online Example. H and r block free file online General Limit Kay Bailey Hutchison Spousal IRA Limit Filing Status Less Than Maximum Contributions More Than Maximum Contributions When Can Contributions Be Made? How Much Can You Deduct?Kay Bailey Hutchison Spousal IRA. H and r block free file online Are You Covered by an Employer Plan? Limit if Covered by Employer Plan Reporting Deductible Contributions Nondeductible Contributions Examples — Worksheet for Reduced IRA Deduction for 2013 What if You Inherit an IRA?Treating it as your own. H and r block free file online Can You Move Retirement Plan Assets?Transfers to Roth IRAs from other retirement plans. H and r block free file online Trustee-to-Trustee Transfer Rollovers Transfers Incident To Divorce Converting From Any Traditional IRA Into a Roth IRA Recharacterizations When Can You Withdraw or Use Assets?Contributions Returned Before Due Date of Return When Must You Withdraw Assets? (Required Minimum Distributions)IRA Owners IRA Beneficiaries Which Table Do You Use To Determine Your Required Minimum Distribution? What Age(s) Do You Use With the Table(s)? Miscellaneous Rules for Required Minimum Distributions Are Distributions Taxable?January 2013 QCDs treated as made in 2012. H and r block free file online 2013 Reporting. H and r block free file online Additional reporting requirements if you made the election to treat a January 2013 QCD as made in 2012. H and r block free file online One-time transfer. H and r block free file online Testing period rules apply. H and r block free file online More information. H and r block free file online Distributions Fully or Partly Taxable Figuring the Nontaxable and Taxable Amounts Recognizing Losses on Traditional IRA Investments Other Special IRA Distribution Situations Reporting and Withholding Requirements for Taxable Amounts What Acts Result in Penalties or Additional Taxes?Prohibited Transactions Investment in Collectibles Excess Contributions Early Distributions Excess Accumulations (Insufficient Distributions) Reporting Additional Taxes What's New for 2013 Traditional IRA contribution and deduction limit. H and r block free file online  The contribution limit to your traditional IRA for 2013 will be increased to the smaller of the following amounts: $5,500, or Your taxable compensation for the year. H and r block free file online If you were age 50 or older before 2014, the most that can be contributed to your traditional IRA for 2013 will be the smaller of the following amounts: $6,500, or Your taxable compensation for the year. H and r block free file online For more information, see How Much Can Be Contributed? in this chapter. H and r block free file online Modified AGI limit for traditional IRA contributions increased. H and r block free file online  For 2013, if you were covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $95,000 but less than $115,000 for a married couple filing a joint return or a qualifying widow(er), More than $59,000 but less than $69,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. H and r block free file online If you either lived with your spouse or file a joint return, and your spouse was covered by a retirement plan at work, but you were not, your deduction is phased out if your modified AGI is more than $178,000 but less than $188,000. H and r block free file online If your modified AGI is $188,000 or more, you cannot take a deduction for contributions to a traditional IRA. H and r block free file online See How Much Can You Deduct? in this chapter. H and r block free file online Net Investment Income Tax. H and r block free file online  For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan (for example, 401(a), 403(a), 403(b), 457(b) plans, and IRAs). H and r block free file online However, these distributions are taken into account when determining the modified adjusted gross income threshold. H and r block free file online Distributions from a nonqualified retirement plan are included in net investment income. H and r block free file online See Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions for more information. H and r block free file online What's New for 2014 Modified AGI limit for traditional IRA contributions increased. H and r block free file online  For 2014, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $96,000 but less than $116,000 for a married couple filing a joint return or a qualifying widow(er), More than $60,000 but less than $70,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. H and r block free file online If you either live with your spouse or file a joint return, and your spouse is covered by a retirement plan at work, but you are not, your deduction is phased out if your modified AGI is more than $181,000 but less than $191,000. H and r block free file online If your modified AGI is $191,000 or more, you cannot take a deduction for contributions to a traditional IRA. H and r block free file online Introduction This chapter discusses the original IRA. H and r block free file online In this publication the original IRA (sometimes called an ordinary or regular IRA) is referred to as a “traditional IRA. H and r block free file online ” A traditional IRA is any IRA that is not a Roth IRA or a SIMPLE IRA. H and r block free file online The following are two advantages of a traditional IRA: You may be able to deduct some or all of your contributions to it, depending on your circumstances. H and r block free file online Generally, amounts in your IRA, including earnings and gains, are not taxed until they are distributed. H and r block free file online Who Can Open a Traditional IRA? You can open and make contributions to a traditional IRA if: You (or, if you file a joint return, your spouse) received taxable compensation during the year, and You were not age 70½ by the end of the year. H and r block free file online You can have a traditional IRA whether or not you are covered by any other retirement plan. H and r block free file online However, you may not be able to deduct all of your contributions if you or your spouse is covered by an employer retirement plan. H and r block free file online See How Much Can You Deduct , later. H and r block free file online Both spouses have compensation. H and r block free file online   If both you and your spouse have compensation and are under age 70½, each of you can open an IRA. H and r block free file online You cannot both participate in the same IRA. H and r block free file online If you file a joint return, only one of you needs to have compensation. H and r block free file online What Is Compensation? Generally, compensation is what you earn from working. H and r block free file online For a summary of what compensation does and does not include, see Table 1-1. H and r block free file online Compensation includes all of the items discussed next (even if you have more than one type). H and r block free file online Wages, salaries, etc. H and r block free file online   Wages, salaries, tips, professional fees, bonuses, and other amounts you receive for providing personal services are compensation. H and r block free file online The IRS treats as compensation any amount properly shown in box 1 (Wages, tips, other compensation) of Form W-2, Wage and Tax Statement, provided that amount is reduced by any amount properly shown in box 11 (Nonqualified plans). H and r block free file online Scholarship and fellowship payments are compensation for IRA purposes only if shown in box 1 of Form W-2. H and r block free file online Commissions. H and r block free file online   An amount you receive that is a percentage of profits or sales price is compensation. H and r block free file online Self-employment income. H and r block free file online   If you are self-employed (a sole proprietor or a partner), compensation is the net earnings from your trade or business (provided your personal services are a material income-producing factor) reduced by the total of: The deduction for contributions made on your behalf to retirement plans, and The deduction allowed for the deductible part of your self-employment taxes. H and r block free file online   Compensation includes earnings from self-employment even if they are not subject to self-employment tax because of your religious beliefs. H and r block free file online Self-employment loss. H and r block free file online   If you have a net loss from self-employment, do not subtract the loss from your salaries or wages when figuring your total compensation. H and r block free file online Alimony and separate maintenance. H and r block free file online   For IRA purposes, compensation includes any taxable alimony and separate maintenance payments you receive under a decree of divorce or separate maintenance. H and r block free file online Nontaxable combat pay. H and r block free file online   If you were a member of the U. H and r block free file online S. H and r block free file online Armed Forces, compensation includes any nontaxable combat pay you received. H and r block free file online This amount should be reported in box 12 of your 2013 Form W-2 with code Q. H and r block free file online Table 1-1. H and r block free file online Compensation for Purposes of an IRA Includes . H and r block free file online . H and r block free file online . H and r block free file online Does not include . H and r block free file online . H and r block free file online . H and r block free file online   earnings and profits from property. H and r block free file online wages, salaries, etc. H and r block free file online     interest and dividend income. H and r block free file online commissions. H and r block free file online     pension or annuity income. H and r block free file online self-employment income. H and r block free file online     deferred compensation. H and r block free file online alimony and separate maintenance. H and r block free file online     income from certain  partnerships. H and r block free file online nontaxable combat pay. H and r block free file online     any amounts you exclude from income. H and r block free file online     What Is Not Compensation? Compensation does not include any of the following items. H and r block free file online Earnings and profits from property, such as rental income, interest income, and dividend income. H and r block free file online Pension or annuity income. H and r block free file online Deferred compensation received (compensation payments postponed from a past year). H and r block free file online Income from a partnership for which you do not provide services that are a material income-producing factor. H and r block free file online Conservation Reserve Program (CRP) payments reported on Schedule SE (Form 1040), line 1b. H and r block free file online Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs. H and r block free file online When Can a Traditional IRA Be Opened? You can open a traditional IRA at any time. H and r block free file online However, the time for making contributions for any year is limited. H and r block free file online See When Can Contributions Be Made , later. H and r block free file online How Can a Traditional IRA Be Opened? You can open different kinds of IRAs with a variety of organizations. H and r block free file online You can open an IRA at a bank or other financial institution or with a mutual fund or life insurance company. H and r block free file online You can also open an IRA through your stockbroker. H and r block free file online Any IRA must meet Internal Revenue Code requirements. H and r block free file online The requirements for the various arrangements are discussed below. H and r block free file online Kinds of traditional IRAs. H and r block free file online   Your traditional IRA can be an individual retirement account or annuity. H and r block free file online It can be part of either a simplified employee pension (SEP) or an employer or employee association trust account. H and r block free file online Individual Retirement Account An individual retirement account is a trust or custodial account set up in the United States for the exclusive benefit of you or your beneficiaries. H and r block free file online The account is created by a written document. H and r block free file online The document must show that the account meets all of the following requirements. H and r block free file online The trustee or custodian must be a bank, a federally insured credit union, a savings and loan association, or an entity approved by the IRS to act as trustee or custodian. H and r block free file online The trustee or custodian generally cannot accept contributions of more than the deductible amount for the year. H and r block free file online However, rollover contributions and employer contributions to a simplified employee pension (SEP) can be more than this amount. H and r block free file online Contributions, except for rollover contributions, must be in cash. H and r block free file online See Rollovers , later. H and r block free file online You must have a nonforfeitable right to the amount at all times. H and r block free file online Money in your account cannot be used to buy a life insurance policy. H and r block free file online Assets in your account cannot be combined with other property, except in a common trust fund or common investment fund. H and r block free file online You must start receiving distributions by April 1 of the year following the year in which you reach age 70½. H and r block free file online See When Must You Withdraw Assets? (Required Minimum Distributions) , later. H and r block free file online Individual Retirement Annuity You can open an individual retirement annuity by purchasing an annuity contract or an endowment contract from a life insurance company. H and r block free file online An individual retirement annuity must be issued in your name as the owner, and either you or your beneficiaries who survive you are the only ones who can receive the benefits or payments. H and r block free file online An individual retirement annuity must meet all the following requirements. H and r block free file online Your entire interest in the contract must be nonforfeitable. H and r block free file online The contract must provide that you cannot transfer any portion of it to any person other than the issuer. H and r block free file online There must be flexible premiums so that if your compensation changes, your payment can also change. H and r block free file online This provision applies to contracts issued after November 6, 1978. H and r block free file online The contract must provide that contributions cannot be more than the deductible amount for an IRA for the year, and that you must use any refunded premiums to pay for future premiums or to buy more benefits before the end of the calendar year after the year in which you receive the refund. H and r block free file online Distributions must begin by April 1 of the year following the year in which you reach age 70½. H and r block free file online See When Must You Withdraw Assets? (Required Minimum Distributions) , later. H and r block free file online Individual Retirement Bonds The sale of individual retirement bonds issued by the federal government was suspended after April 30, 1982. H and r block free file online The bonds have the following features. H and r block free file online They stop earning interest when you reach age 70½. H and r block free file online If you die, interest will stop 5 years after your death, or on the date you would have reached age 70½, whichever is earlier. H and r block free file online You cannot transfer the bonds. H and r block free file online If you cash (redeem) the bonds before the year in which you reach age 59½, you may be subject to a 10% additional tax. H and r block free file online See Age 59½ Rule under Early Distributions, later. H and r block free file online You can roll over redemption proceeds into IRAs. H and r block free file online Simplified Employee Pension (SEP) A simplified employee pension (SEP) is a written arrangement that allows your employer to make deductible contributions to a traditional IRA (a SEP IRA) set up for you to receive such contributions. H and r block free file online Generally, distributions from SEP IRAs are subject to the withdrawal and tax rules that apply to traditional IRAs. H and r block free file online See Publication 560 for more information about SEPs. H and r block free file online Employer and Employee Association Trust Accounts Your employer or your labor union or other employee association can set up a trust to provide individual retirement accounts for employees or members. H and r block free file online The requirements for individual retirement accounts apply to these traditional IRAs. H and r block free file online Required Disclosures The trustee or issuer (sometimes called the sponsor) of your traditional IRA generally must give you a disclosure statement at least 7 days before you open your IRA. H and r block free file online However, the sponsor does not have to give you the statement until the date you open (or purchase, if earlier) your IRA, provided you are given at least 7 days from that date to revoke the IRA. H and r block free file online The disclosure statement must explain certain items in plain language. H and r block free file online For example, the statement should explain when and how you can revoke the IRA, and include the name, address, and telephone number of the person to receive the notice of cancellation. H and r block free file online This explanation must appear at the beginning of the disclosure statement. H and r block free file online If you revoke your IRA within the revocation period, the sponsor must return to you the entire amount you paid. H and r block free file online The sponsor must report on the appropriate IRS forms both your contribution to the IRA (unless it was made by a trustee-to-trustee transfer) and the amount returned to you. H and r block free file online These requirements apply to all sponsors. H and r block free file online How Much Can Be Contributed? There are limits and other rules that affect the amount that can be contributed to a traditional IRA. H and r block free file online These limits and rules are explained below. H and r block free file online Community property laws. H and r block free file online   Except as discussed later under Kay Bailey Hutchison Spousal IRA Limit , each spouse figures his or her limit separately, using his or her own compensation. H and r block free file online This is the rule even in states with community property laws. H and r block free file online Brokers' commissions. H and r block free file online   Brokers' commissions paid in connection with your traditional IRA are subject to the contribution limit. H and r block free file online For information about whether you can deduct brokers' commissions, see Brokers' commissions , later, under How Much Can You Deduct. H and r block free file online Trustees' fees. H and r block free file online   Trustees' administrative fees are not subject to the contribution limit. H and r block free file online For information about whether you can deduct trustees' fees, see Trustees' fees , later, under How Much Can You Deduct. H and r block free file online Qualified reservist repayments. H and r block free file online   If you were a member of a reserve component and you were ordered or called to active duty after September 11, 2001, you may be able to contribute (repay) to an IRA amounts equal to any qualified reservist distributions (defined later under Early Distributions) you received. H and r block free file online You can make these repayment contributions even if they would cause your total contributions to the IRA to be more than the general limit on contributions. H and r block free file online To be eligible to make these repayment contributions, you must have received a qualified reservist distribution from an IRA or from a section 401(k) or 403(b) plan or a similar arrangement. H and r block free file online Limit. H and r block free file online   Your qualified reservist repayments cannot be more than your qualified reservist distributions, explained under Early Distributions , later. H and r block free file online When repayment contributions can be made. H and r block free file online   You cannot make these repayment contributions later than the date that is 2 years after your active duty period ends. H and r block free file online No deduction. H and r block free file online   You cannot deduct qualified reservist repayments. H and r block free file online Reserve component. H and r block free file online   The term “reserve component” means the: Army National Guard of the United States, Army Reserve, Naval Reserve, Marine Corps Reserve, Air National Guard of the United States, Air Force Reserve, Coast Guard Reserve, or Reserve Corps of the Public Health Service. H and r block free file online Figuring your IRA deduction. H and r block free file online   The repayment of qualified reservist distributions does not affect the amount you can deduct as an IRA contribution. H and r block free file online Reporting the repayment. H and r block free file online   If you repay a qualified reservist distribution, include the amount of the repayment with nondeductible contributions on line 1 of Form 8606. H and r block free file online Example. H and r block free file online   In 2013, your IRA contribution limit is $5,500. H and r block free file online However, because of your filing status and AGI, the limit on the amount you can deduct is $3,500. H and r block free file online You can make a nondeductible contribution of $2,000 ($5,500 - $3,500). H and r block free file online In an earlier year you received a $3,000 qualified reservist distribution, which you would like to repay this year. H and r block free file online   For 2013, you can contribute a total of $8,500 to your IRA. H and r block free file online This is made up of the maximum deductible contribution of $3,500; a nondeductible contribution of $2,000; and a $3,000 qualified reservist repayment. H and r block free file online You contribute the maximum allowable for the year. H and r block free file online Since you are making a nondeductible contribution ($2,000) and a qualified reservist repayment ($3,000), you must file Form 8606 with your return and include $5,000 ($2,000 + $3,000) on line 1 of Form 8606. H and r block free file online The qualified reservist repayment is not deductible. H and r block free file online Contributions on your behalf to a traditional IRA reduce your limit for contributions to a Roth IRA. H and r block free file online See chapter 2 for information about Roth IRAs. H and r block free file online General Limit For 2013, the most that can be contributed to your traditional IRA generally is the smaller of the following amounts: $5,500 ($6,500 if you are age 50 or older), or Your taxable compensation (defined earlier) for the year. H and r block free file online Note. H and r block free file online This limit is reduced by any contributions to a section 501(c)(18) plan (generally, a pension plan created before June 25, 1959, that is funded entirely by employee contributions). H and r block free file online This is the most that can be contributed regardless of whether the contributions are to one or more traditional IRAs or whether all or part of the contributions are nondeductible. H and r block free file online (See Nondeductible Contributions , later. H and r block free file online ) Qualified reservist repayments do not affect this limit. H and r block free file online Examples. H and r block free file online George, who is 34 years old and single, earns $24,000 in 2013. H and r block free file online His IRA contributions for 2013 are limited to $5,500. H and r block free file online Danny, an unmarried college student working part time, earns $3,500 in 2013. H and r block free file online His IRA contributions for 2013 are limited to $3,500, the amount of his compensation. H and r block free file online More than one IRA. H and r block free file online   If you have more than one IRA, the limit applies to the total contributions made on your behalf to all your traditional IRAs for the year. H and r block free file online Annuity or endowment contracts. H and r block free file online   If you invest in an annuity or endowment contract under an individual retirement annuity, no more than $5,500 ($6,500 if you are age 50 or older) can be contributed toward its cost for the tax year, including the cost of life insurance coverage. H and r block free file online If more than this amount is contributed, the annuity or endowment contract is disqualified. H and r block free file online Kay Bailey Hutchison Spousal IRA Limit For 2013, if you file a joint return and your taxable compensation is less than that of your spouse, the most that can be contributed for the year to your IRA is the smaller of the following two amounts: $5,500 ($6,500 if you are age 50 or older), or The total compensation includible in the gross income of both you and your spouse for the year, reduced by the following two amounts. H and r block free file online Your spouse's IRA contribution for the year to a traditional IRA. H and r block free file online Any contributions for the year to a Roth IRA on behalf of your spouse. H and r block free file online This means that the total combined contributions that can be made for the year to your IRA and your spouse's IRA can be as much as $11,000 ($12,000 if only one of you is age 50 or older or $13,000 if both of you are age 50 or older). H and r block free file online Note. H and r block free file online This traditional IRA limit is reduced by any contributions to a section 501(c)(18) plan (generally, a pension plan created before June 25, 1959, that is funded entirely by employee contributions). H and r block free file online Example. H and r block free file online Kristin, a full-time student with no taxable compensation, marries Carl during the year. H and r block free file online Neither of them was age 50 by the end of 2013. H and r block free file online For the year, Carl has taxable compensation of $30,000. H and r block free file online He plans to contribute (and deduct) $5,500 to a traditional IRA. H and r block free file online If he and Kristin file a joint return, each can contribute $5,500 to a traditional IRA. H and r block free file online This is because Kristin, who has no compensation, can add Carl's compensation, reduced by the amount of his IRA contribution ($30,000 − $5,500 = $24,500), to her own compensation (-0-) to figure her maximum contribution to a traditional IRA. H and r block free file online In her case, $5,500 is her contribution limit, because $5,500 is less than $24,500 (her compensation for purposes of figuring her contribution limit). H and r block free file online Filing Status Generally, except as discussed earlier under Kay Bailey Hutchison Spousal IRA Limit , your filing status has no effect on the amount of allowable contributions to your traditional IRA. H and r block free file online However, if during the year either you or your spouse was covered by a retirement plan at work, your deduction may be reduced or eliminated, depending on your filing status and income. H and r block free file online See How Much Can You Deduct , later. H and r block free file online Example. H and r block free file online Tom and Darcy are married and both are 53. H and r block free file online They both work and each has a traditional IRA. H and r block free file online Tom earned $3,800 and Darcy earned $48,000 in 2013. H and r block free file online Because of the Kay Bailey Hutchison Spousal IRA limit rule, even though Tom earned less than $6,500, they can contribute up to $6,500 to his IRA for 2013 if they file a joint return. H and r block free file online They can contribute up to $6,500 to Darcy's IRA. H and r block free file online If they file separate returns, the amount that can be contributed to Tom's IRA is limited by his earned income, $3,800. H and r block free file online Less Than Maximum Contributions If contributions to your traditional IRA for a year were less than the limit, you cannot contribute more after the due date of your return for that year to make up the difference. H and r block free file online Example. H and r block free file online Rafael, who is 40, earns $30,000 in 2013. H and r block free file online Although he can contribute up to $5,500 for 2013, he contributes only $3,000. H and r block free file online After April 15, 2014, Rafael cannot make up the difference between his actual contributions for 2013 ($3,000) and his 2013 limit ($5,500). H and r block free file online He cannot contribute $2,500 more than the limit for any later year. H and r block free file online More Than Maximum Contributions If contributions to your IRA for a year were more than the limit, you can apply the excess contribution in one year to a later year if the contributions for that later year are less than the maximum allowed for that year. H and r block free file online However, a penalty or additional tax may apply. H and r block free file online See Excess Contributions , later, under What Acts Result in Penalties or Additional Taxes. H and r block free file online When Can Contributions Be Made? As soon as you open your traditional IRA, contributions can be made to it through your chosen sponsor (trustee or other administrator). H and r block free file online Contributions must be in the form of money (cash, check, or money order). H and r block free file online Property cannot be contributed. H and r block free file online Although property cannot be contributed, your IRA may invest in certain property. H and r block free file online For example, your IRA may purchase shares of stock. H and r block free file online For other restrictions on the use of funds in your IRA, see Prohibited Transactions , later in this chapter. H and r block free file online You may be able to transfer or roll over certain property from one retirement plan to another. H and r block free file online See the discussion of rollovers and other transfers later in this chapter under Can You Move Retirement Plan Assets . H and r block free file online You can make a contribution to your IRA by having your income tax refund (or a portion of your refund), if any, paid directly to your traditional IRA, Roth IRA, or SEP IRA. H and r block free file online For details, see the instructions for your income tax return or Form 8888, Allocation of Refund (Including Savings Bond Purchases). H and r block free file online Contributions can be made to your traditional IRA for each year that you receive compensation and have not reached age 70½. H and r block free file online For any year in which you do not work, contributions cannot be made to your IRA unless you receive alimony, nontaxable combat pay, military differential pay, or file a joint return with a spouse who has compensation. H and r block free file online See Who Can Open a Traditional IRA , earlier. H and r block free file online Even if contributions cannot be made for the current year, the amounts contributed for years in which you did qualify can remain in your IRA. H and r block free file online Contributions can resume for any years that you qualify. H and r block free file online Contributions must be made by due date. H and r block free file online   Contributions can be made to your traditional IRA for a year at any time during the year or by the due date for filing your return for that year, not including extensions. H and r block free file online For most people, this means that contributions for 2013 must be made by April 15, 2014, and contributions for 2014 must be made by April 15, 2015. H and r block free file online Age 70½ rule. H and r block free file online   Contributions cannot be made to your traditional IRA for the year in which you reach age 70½ or for any later year. H and r block free file online   You attain age 70½ on the date that is 6 calendar months after the 70th anniversary of your birth. H and r block free file online If you were born on or before June 30, 1943, you cannot contribute for 2013 or any later year. H and r block free file online Designating year for which contribution is made. H and r block free file online   If an amount is contributed to your traditional IRA between January 1 and April 15, you should tell the sponsor which year (the current year or the previous year) the contribution is for. H and r block free file online If you do not tell the sponsor which year it is for, the sponsor can assume, and report to the IRS, that the contribution is for the current year (the year the sponsor received it). H and r block free file online Filing before a contribution is made. H and r block free file online    You can file your return claiming a traditional IRA contribution before the contribution is actually made. H and r block free file online Generally, the contribution must be made by the due date of your return, not including extensions. H and r block free file online Contributions not required. H and r block free file online   You do not have to contribute to your traditional IRA for every tax year, even if you can. H and r block free file online How Much Can You Deduct? Generally, you can deduct the lesser of: The contributions to your traditional IRA for the year, or The general limit (or the Kay Bailey Hutchison Spousal IRA limit, if applicable) explained earlier under How Much Can Be Contributed . H and r block free file online However, if you or your spouse was covered by an employer retirement plan, you may not be able to deduct this amount. H and r block free file online See Limit if Covered by Employer Plan , later. H and r block free file online You may be able to claim a credit for contributions to your traditional IRA. H and r block free file online For more information, see chapter 4. H and r block free file online Trustees' fees. H and r block free file online   Trustees' administrative fees that are billed separately and paid in connection with your traditional IRA are not deductible as IRA contributions. H and r block free file online However, they may be deductible as a miscellaneous itemized deduction on Schedule A (Form 1040). H and r block free file online For information about miscellaneous itemized deductions, see Publication 529, Miscellaneous Deductions. H and r block free file online Brokers' commissions. H and r block free file online   These commissions are part of your IRA contribution and, as such, are deductible subject to the limits. H and r block free file online Full deduction. H and r block free file online   If neither you nor your spouse was covered for any part of the year by an employer retirement plan, you can take a deduction for total contributions to one or more of your traditional IRAs of up to the lesser of: $5,500 ($6,500 if you are age 50 or older), or 100% of your compensation. H and r block free file online   This limit is reduced by any contributions made to a 501(c)(18) plan on your behalf. H and r block free file online Kay Bailey Hutchison Spousal IRA. H and r block free file online   In the case of a married couple with unequal compensation who file a joint return, the deduction for contributions to the traditional IRA of the spouse with less compensation is limited to the lesser of: $5,500 ($6,500 if the spouse with the lower compensation is age 50 or older), or The total compensation includible in the gross income of both spouses for the year reduced by the following three amounts. H and r block free file online The IRA deduction for the year of the spouse with the greater compensation. H and r block free file online Any designated nondeductible contribution for the year made on behalf of the spouse with the greater compensation. H and r block free file online Any contributions for the year to a Roth IRA on behalf of the spouse with the greater compensation. H and r block free file online   This limit is reduced by any contributions to a section 501(c)(18) plan on behalf of the spouse with the lesser compensation. H and r block free file online Note. H and r block free file online If you were divorced or legally separated (and did not remarry) before the end of the year, you cannot deduct any contributions to your spouse's IRA. H and r block free file online After a divorce or legal separation, you can deduct only the contributions to your own IRA. H and r block free file online Your deductions are subject to the rules for single individuals. H and r block free file online Covered by an employer retirement plan. H and r block free file online   If you or your spouse was covered by an employer retirement plan at any time during the year for which contributions were made, your deduction may be further limited. H and r block free file online This is discussed later under Limit if Covered by Employer Plan . H and r block free file online Limits on the amount you can deduct do not affect the amount that can be contributed. H and r block free file online Are You Covered by an Employer Plan? The Form W-2 you receive from your employer has a box used to indicate whether you were covered for the year. H and r block free file online The “Retirement Plan” box should be checked if you were covered. H and r block free file online Reservists and volunteer firefighters should also see Situations in Which You Are Not Covered , later. H and r block free file online If you are not certain whether you were covered by your employer's retirement plan, you should ask your employer. H and r block free file online Federal judges. H and r block free file online   For purposes of the IRA deduction, federal judges are covered by an employer plan. H and r block free file online For Which Year(s) Are You Covered? Special rules apply to determine the tax years for which you are covered by an employer plan. H and r block free file online These rules differ depending on whether the plan is a defined contribution plan or a defined benefit plan. H and r block free file online Tax year. H and r block free file online   Your tax year is the annual accounting period you use to keep records and report income and expenses on your income tax return. H and r block free file online For almost all people, the tax year is the calendar year. H and r block free file online Defined contribution plan. H and r block free file online   Generally, you are covered by a defined contribution plan for a tax year if amounts are contributed or allocated to your account for the plan year that ends with or within that tax year. H and r block free file online However, also see Situations in Which You Are Not Covered , later. H and r block free file online   A defined contribution plan is a plan that provides for a separate account for each person covered by the plan. H and r block free file online In a defined contribution plan, the amount to be contributed to each participant's account is spelled out in the plan. H and r block free file online The level of benefits actually provided to a participant depends on the total amount contributed to that participant's account and any earnings and losses on those contributions. H and r block free file online Types of defined contribution plans include profit-sharing plans, stock bonus plans, and money purchase pension plans. H and r block free file online Example. H and r block free file online Company A has a money purchase pension plan. H and r block free file online Its plan year is from July 1 to June 30. H and r block free file online The plan provides that contributions must be allocated as of June 30. H and r block free file online Bob, an employee, leaves Company A on December 31, 2012. H and r block free file online The contribution for the plan year ending on June 30, 2013, is made February 15, 2014. H and r block free file online Because an amount is contributed to Bob's account for the plan year, Bob is covered by the plan for his 2013 tax year. H and r block free file online   A special rule applies to certain plans in which it is not possible to determine if an amount will be contributed to your account for a given plan year. H and r block free file online If, for a plan year, no amounts have been allocated to your account that are attributable to employer contributions, employee contributions, or forfeitures, by the last day of the plan year, and contributions are discretionary for the plan year, you are not covered for the tax year in which the plan year ends. H and r block free file online If, after the plan year ends, the employer makes a contribution for that plan year, you are covered for the tax year in which the contribution is made. H and r block free file online Example. H and r block free file online Mickey was covered by a profit-sharing plan and left the company on December 31, 2012. H and r block free file online The plan year runs from July 1 to June 30. H and r block free file online Under the terms of the plan, employer contributions do not have to be made, but if they are made, they are contributed to the plan before the due date for filing the company's tax return. H and r block free file online Such contributions are allocated as of the last day of the plan year, and allocations are made to the accounts of individuals who have any service during the plan year. H and r block free file online As of June 30, 2013, no contributions were made that were allocated to the June 30, 2013, plan year, and no forfeitures had been allocated within the plan year. H and r block free file online In addition, as of that date, the company was not obligated to make a contribution for such plan year and it was impossible to determine whether or not a contribution would be made for the plan year. H and r block free file online On December 31, 2013, the company decided to contribute to the plan for the plan year ending June 30, 2013. H and r block free file online That contribution was made on February 15, 2014. H and r block free file online Mickey is an active participant in the plan for his 2014 tax year but not for his 2013 tax year. H and r block free file online No vested interest. H and r block free file online   If an amount is allocated to your account for a plan year, you are covered by that plan even if you have no vested interest in (legal right to) the account. H and r block free file online Defined benefit plan. H and r block free file online   If you are eligible to participate in your employer's defined benefit plan for the plan year that ends within your tax year, you are covered by the plan. H and r block free file online This rule applies even if you: Declined to participate in the plan, Did not make a required contribution, or Did not perform the minimum service required to accrue a benefit for the year. H and r block free file online   A defined benefit plan is any plan that is not a defined contribution plan. H and r block free file online In a defined benefit plan, the level of benefits to be provided to each participant is spelled out in the plan. H and r block free file online The plan administrator figures the amount needed to provide those benefits and those amounts are contributed to the plan. H and r block free file online Defined benefit plans include pension plans and annuity plans. H and r block free file online Example. H and r block free file online Nick, an employee of Company B, is eligible to participate in Company B's defined benefit plan, which has a July 1 to June 30 plan year. H and r block free file online Nick leaves Company B on December 31, 2012. H and r block free file online Because Nick is eligible to participate in the plan for its year ending June 30, 2013, he is covered by the plan for his 2013 tax year. H and r block free file online No vested interest. H and r block free file online   If you accrue a benefit for a plan year, you are covered by that plan even if you have no vested interest in (legal right to) the accrual. H and r block free file online Situations in Which You Are Not Covered Unless you are covered by another employer plan, you are not covered by an employer plan if you are in one of the situations described below. H and r block free file online Social security or railroad retirement. H and r block free file online   Coverage under social security or railroad retirement is not coverage under an employer retirement plan. H and r block free file online Benefits from previous employer's plan. H and r block free file online   If you receive retirement benefits from a previous employer's plan, you are not covered by that plan. H and r block free file online Reservists. H and r block free file online   If the only reason you participate in a plan is because you are a member of a reserve unit of the Armed Forces, you may not be covered by the plan. H and r block free file online You are not covered by the plan if both of the following conditions are met. H and r block free file online The plan you participate in is established for its employees by: The United States, A state or political subdivision of a state, or An instrumentality of either (a) or (b) above. H and r block free file online You did not serve more than 90 days on active duty during the year (not counting duty for training). H and r block free file online Volunteer firefighters. H and r block free file online   If the only reason you participate in a plan is because you are a volunteer firefighter, you may not be covered by the plan. H and r block free file online You are not covered by the plan if both of the following conditions are met. H and r block free file online The plan you participate in is established for its employees by: The United States, A state or political subdivision of a state, or An instrumentality of either (a) or (b) above. H and r block free file online Your accrued retirement benefits at the beginning of the year will not provide more than $1,800 per year at retirement. H and r block free file online Limit if Covered by Employer Plan As discussed earlier, the deduction you can take for contributions made to your traditional IRA depends on whether you or your spouse was covered for any part of the year by an employer retirement plan. H and r block free file online Your deduction is also affected by how much income you had and by your filing status. H and r block free file online Your deduction may also be affected by social security benefits you received. H and r block free file online Reduced or no deduction. H and r block free file online   If either you or your spouse was covered by an employer retirement plan, you may be entitled to only a partial (reduced) deduction or no deduction at all, depending on your income and your filing status. H and r block free file online   Your deduction begins to decrease (phase out) when your income rises above a certain amount and is eliminated altogether when it reaches a higher amount. H and r block free file online These amounts vary depending on your filing status. H and r block free file online   To determine if your deduction is subject to the phaseout, you must determine your modified adjusted gross income (AGI) and your filing status, as explained later under Deduction Phaseout . H and r block free file online Once you have determined your modified AGI and your filing status, you can use Table 1-2 or Table 1-3 to determine if the phaseout applies. H and r block free file online Social Security Recipients Instead of using Table 1-2 or Table 1-3 and Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, later, complete the worksheets in Appendix B of this publication if, for the year, all of the following apply. H and r block free file online You received social security benefits. H and r block free file online You received taxable compensation. H and r block free file online Contributions were made to your traditional IRA. H and r block free file online You or your spouse was covered by an employer retirement plan. H and r block free file online Use the worksheets in Appendix B to figure your IRA deduction, your nondeductible contribution, and the taxable portion, if any, of your social security benefits. H and r block free file online Appendix B includes an example with filled-in worksheets to assist you. H and r block free file online Table 1-2. H and r block free file online Effect of Modified AGI1 on Deduction if You Are Covered by a Retirement Plan at Work If you are covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction. H and r block free file online IF your filing status is . H and r block free file online . H and r block free file online . H and r block free file online AND your modified adjusted gross income (modified AGI) is . H and r block free file online . H and r block free file online . H and r block free file online THEN you can take . H and r block free file online . H and r block free file online . H and r block free file online single or head of household $59,000 or less a full deduction. H and r block free file online more than $59,000 but less than $69,000 a partial deduction. H and r block free file online $69,000 or more no deduction. H and r block free file online married filing jointly or  qualifying widow(er) $95,000 or less a full deduction. H and r block free file online more than $95,000 but less than $115,000 a partial deduction. H and r block free file online $115,000 or more no deduction. H and r block free file online married filing separately2 less than $10,000 a partial deduction. H and r block free file online $10,000 or more no deduction. H and r block free file online 1 Modified AGI (adjusted gross income). H and r block free file online See Modified adjusted gross income (AGI) , later. H and r block free file online  2 If you did not live with your spouse at any time during the year, your filing status is considered Single for this purpose (therefore, your IRA deduction is determined under the “Single” filing status). H and r block free file online Table 1-3. H and r block free file online Effect of Modified AGI1 on Deduction if You Are NOT Covered by a Retirement Plan at Work If you are not covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction. H and r block free file online IF your filing status is . H and r block free file online . H and r block free file online . H and r block free file online AND your modified adjusted gross income (modified AGI) is . H and r block free file online . H and r block free file online . H and r block free file online THEN you can take . H and r block free file online . H and r block free file online . H and r block free file online single, head of household, or qualifying widow(er) any amount a full deduction. H and r block free file online married filing jointly or separately with a spouse who is not covered by a plan at work any amount a full deduction. H and r block free file online married filing jointly with a spouse who is covered by a plan at work $178,000 or less a full deduction. H and r block free file online more than $178,000 but less than $188,000 a partial deduction. H and r block free file online $188,000 or more no deduction. H and r block free file online married filing separately with a spouse who is covered by a plan at work2 less than $10,000 a partial deduction. H and r block free file online $10,000 or more no deduction. H and r block free file online 1 Modified AGI (adjusted gross income). H and r block free file online See Modified adjusted gross income (AGI) , later. H and r block free file online  2 You are entitled to the full deduction if you did not live with your spouse at any time during the year. H and r block free file online For 2014, if you are not covered by a retirement plan at work and you are married filing jointly with a spouse who is covered by a plan at work, your deduction is phased out if your modified AGI is more than $181,000 but less than $191,000. H and r block free file online If your AGI is $191,000 or more, you cannot take a deduction for a contribution to a traditional IRA. H and r block free file online Deduction Phaseout The amount of any reduction in the limit on your IRA deduction (phaseout) depends on whether you or your spouse was covered by an employer retirement plan. H and r block free file online Covered by a retirement plan. H and r block free file online   If you are covered by an employer retirement plan and you did not receive any social security retirement benefits, your IRA deduction may be reduced or eliminated depending on your filing status and modified AGI, as shown in Table 1-2. H and r block free file online For 2014, if you are covered by a retirement plan at work, your IRA deduction will not be reduced (phased out) unless your modified AGI is: More than $60,000 but less than $70,000 for a single individual (or head of household), More than $96,000 but less than $116,000 for a married couple filing a joint return (or a qualifying widow(er)), or Less than $10,000 for a married individual filing a separate return. H and r block free file online If your spouse is covered. H and r block free file online   If you are not covered by an employer retirement plan, but your spouse is, and you did not receive any social security benefits, your IRA deduction may be reduced or eliminated entirely depending on your filing status and modified AGI as shown in Table 1-3. H and r block free file online Filing status. H and r block free file online   Your filing status depends primarily on your marital status. H and r block free file online For this purpose, you need to know if your filing status is single or head of household, married filing jointly or qualifying widow(er), or married filing separately. H and r block free file online If you need more information on filing status, see Publication 501, Exemptions, Standard Deduction, and Filing Information. H and r block free file online Lived apart from spouse. H and r block free file online   If you did not live with your spouse at any time during the year and you file a separate return, your filing status, for this purpose, is single. H and r block free file online Modified adjusted gross income (AGI). H and r block free file online   You can use Worksheet 1-1 to figure your modified AGI. H and r block free file online If you made contributions to your IRA for 2013 and received a distribution from your IRA in 2013, see Both contributions for 2013 and distributions in 2013 , later. H and r block free file online    Do not assume that your modified AGI is the same as your compensation. H and r block free file online Your modified AGI may include income in addition to your compensation (discussed earlier) such as interest, dividends, and income from IRA distributions. H and r block free file online Form 1040. H and r block free file online   If you file Form 1040, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following amounts. H and r block free file online IRA deduction. H and r block free file online Student loan interest deduction. H and r block free file online Tuition and fees deduction. H and r block free file online Domestic production activities deduction. H and r block free file online Foreign earned income exclusion. H and r block free file online Foreign housing exclusion or deduction. H and r block free file online Exclusion of qualified savings bond interest shown on Form 8815. H and r block free file online Exclusion of employer-provided adoption benefits shown on Form 8839. H and r block free file online This is your modified AGI. H and r block free file online Form 1040A. H and r block free file online   If you file Form 1040A, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following amounts. H and r block free file online IRA deduction. H and r block free file online Student loan interest deduction. H and r block free file online Tuition and fees deduction. H and r block free file online Exclusion of qualified savings bond interest shown on Form 8815. H and r block free file online This is your modified AGI. H and r block free file online Form 1040NR. H and r block free file online   If you file Form 1040NR, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following amounts. H and r block free file online IRA deduction. H and r block free file online Student loan interest deduction. H and r block free file online Domestic production activities deduction. H and r block free file online Exclusion of qualified savings bond interest shown on Form 8815. H and r block free file online Exclusion of employer-provided adoption benefits shown on Form 8839. H and r block free file online This is your modified AGI. H and r block free file online Income from IRA distributions. H and r block free file online   If you received distributions in 2013 from one or more traditional IRAs and your traditional IRAs include only deductible contributions, the distributions are fully taxable and are included in your modified AGI. H and r block free file online Both contributions for 2013 and distributions in 2013. H and r block free file online   If all three of the following apply, any IRA distributions you received in 2013 may be partly tax free and partly taxable. H and r block free file online You received distributions in 2013 from one or more traditional IRAs, You made contributions to a traditional IRA for 2013, and Some of those contributions may be nondeductible contributions. H and r block free file online (See Nondeductible Contributions and Worksheet 1-2, later. H and r block free file online ) If this is your situation, you must figure the taxable part of the traditional IRA distribution before you can figure your modified AGI. H and r block free file online To do this, you can use Worksheet 1-5, later. H and r block free file online   If at least one of the above does not apply, figure your modified AGI using Worksheet 1-1, later. H and r block free file online How To Figure Your Reduced IRA Deduction If you or your spouse is covered by an employer retirement plan and you did not receive any social security benefits, you can figure your reduced IRA deduction by using Worksheet 1-2. H and r block free file online Figuring Your Reduced IRA Deduction for 2013. H and r block free file online The Instructions for Form 1040, Form 1040A, and Form 1040NR include similar worksheets that you can use instead of the worksheet in this publication. H and r block free file online If you or your spouse is covered by an employer retirement plan, and you received any social security benefits, see Social Security Recipients , earlier. H and r block free file online Note. H and r block free file online If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. H and r block free file online Worksheet 1-1. H and r block free file online Figuring Your Modified AGI Use this worksheet to figure your modified AGI for traditional IRA purposes. H and r block free file online 1. H and r block free file online Enter your adjusted gross income (AGI) from Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37, figured without taking into account the amount from Form 1040, line 32; Form 1040A, line 17; or Form 1040NR, line 32 1. H and r block free file online   2. H and r block free file online Enter any student loan interest deduction from Form 1040, line 33; Form 1040A, line 18; or Form 1040NR, line 33 2. H and r block free file online   3. H and r block free file online Enter any tuition and fees deduction from Form 1040, line 34, or Form 1040A, line 19 3. H and r block free file online   4. H and r block free file online Enter any domestic production activities deduction from Form 1040, line 35, or Form 1040NR, line 34 4. H and r block free file online   5. H and r block free file online Enter any foreign earned income exclusion and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18 5. H and r block free file online   6. H and r block free file online Enter any foreign housing deduction from Form 2555, line 50 6. H and r block free file online   7. H and r block free file online Enter any excludable savings bond interest from Form 8815, line 14 7. H and r block free file online   8. H and r block free file online Enter any excluded employer-provided adoption benefits from Form 8839, line 28 8. H and r block free file online   9. H and r block free file online Add lines 1 through 8. H and r block free file online This is your Modified AGI for traditional IRA purposes 9. H and r block free file online   Reporting Deductible Contributions If you file Form 1040, enter your IRA deduction on line 32 of that form. H and r block free file online If you file Form 1040A, enter your IRA deduction on line 17 of that form. H and r block free file online If you file Form 1040NR, enter your IRA deduction on line 32 of that form. H and r block free file online You cannot deduct IRA contributions on Form 1040EZ or Form 1040NR-EZ. H and r block free file online Self-employed. H and r block free file online   If you are self-employed (a sole proprietor or partner) and have a SIMPLE IRA, enter your deduction for allowable plan contributions on Form 1040, line 28. H and r block free file online If you file Form 1040NR, enter your deduction on line 28 of that form. H and r block free file online Nondeductible Contributions Although your deduction for IRA contributions may be reduced or eliminated, contributions can be made to your IRA of up to the general limit or, if it applies, the Kay Bailey Hutchison Spousal IRA limit. H and r block free file online The difference between your total permitted contributions and your IRA deduction, if any, is your nondeductible contribution. H and r block free file online Example. H and r block free file online Tony is 29 years old and single. H and r block free file online In 2013, he was covered by a retirement plan at work. H and r block free file online His salary is $62,000. H and r block free file online His modified AGI is $70,000. H and r block free file online Tony makes a $5,500 IRA contribution for 2013. H and r block free file online Because he was covered by a retirement plan and his modified AGI is above $69,000, he cannot deduct his $5,500 IRA contribution. H and r block free file online He must designate this contribution as a nondeductible contribution by reporting it on Form 8606. H and r block free file online Repayment of reservist distributions. H and r block free file online   Nondeductible contributions may include repayments of qualified reservist distributions. H and r block free file online For more information, see Qualified reservist repayments under How Much Can Be Contributed, earlier. H and r block free file online Form 8606. H and r block free file online   To designate contributions as nondeductible, you must file Form 8606. H and r block free file online (See the filled-in Forms 8606 in this chapter. H and r block free file online )   You do not have to designate a contribution as nondeductible until you file your tax return. H and r block free file online When you file, you can even designate otherwise deductible contributions as nondeductible contributions. H and r block free file online   You must file Form 8606 to report nondeductible contributions even if you do not have to file a tax return for the year. H and r block free file online    A Form 8606 is not used for the year that you make a rollover from a qualified retirement plan to a traditional IRA and the rollover includes nontaxable amounts. H and r block free file online In those situations, a Form 8606 is completed for the year you take a distribution from that IRA. H and r block free file online See Form 8606 under Distributions Fully or Partly Taxable, later. H and r block free file online Failure to report nondeductible contributions. H and r block free file online   If you do not report nondeductible contributions, all of the contributions to your traditional IRA will be treated like deductible contributions when withdrawn. H and r block free file online All distributions from your IRA will be taxed unless you can show, with satisfactory evidence, that nondeductible contributions were made. H and r block free file online Penalty for overstatement. H and r block free file online   If you overstate the amount of nondeductible contributions on your Form 8606 for any tax year, you must pay a penalty of $100 for each overstatement, unless it was due to reasonable cause. H and r block free file online Penalty for failure to file Form 8606. H and r block free file online   You will have to pay a $50 penalty if you do not file a required Form 8606, unless you can prove that the failure was due to reasonable cause. H and r block free file online Tax on earnings on nondeductible contributions. H and r block free file online   As long as contributions are within the contribution limits, none of the earnings or gains on contributions (deductible or nondeductible) will be taxed until they are distributed. H and r block free file online Cost basis. H and r block free file online   You will have a cost basis in your traditional IRA if you made any nondeductible contributions. H and r block free file online Your cost basis is the sum of the nondeductible contributions to your IRA minus any withdrawals or distributions of nondeductible contributions. H and r block free file online    Commonly, distributions from your traditional IRAs will include both taxable and nontaxable (cost basis) amounts. H and r block free file online See Are Distributions Taxable, later, for more information. H and r block free file online Recordkeeping. H and r block free file online There is a recordkeeping worksheet, Appendix A. H and r block free file online Summary Record of Traditional IRA(s) for 2013 , that you can use to keep a record of deductible and nondeductible IRA contributions. H and r block free file online Examples — Worksheet for Reduced IRA Deduction for 2013 The following examples illustrate the use of Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013. H and r block free file online Example 1. H and r block free file online For 2013, Tom and Betty file a joint return on Form 1040. H and r block free file online They are both 39 years old. H and r block free file online They are both employed and Tom is covered by his employer's retirement plan. H and r block free file online Tom's salary is $59,000 and Betty's is $32,555. H and r block free file online They each have a traditional IRA and their combined modified AGI, which includes $5,000 interest and dividend income, is $96,555. H and r block free file online Because their modified AGI is between $95,000 and $115,000 and Tom is covered by an employer plan, Tom is subject to the deduction phaseout discussed earlier under Limit if Covered by Employer Plan . H and r block free file online For 2013, Tom contributed $5,500 to his IRA and Betty contributed $5,500 to hers. H and r block free file online Even though they file a joint return, they must use separate worksheets to figure the IRA deduction for each of them. H and r block free file online Tom can take a deduction of only $5,080. H and r block free file online He can choose to treat the $5,080 as either deductible or nondeductible contributions. H and r block free file online He can either leave the $420 ($5,500 − $5,080) of nondeductible contributions in his IRA or withdraw them by April 15, 2014. H and r block free file online He decides to treat the $5,080 as deductible contributions and leave the $420 of nondeductible contributions in his IRA. H and r block free file online Using Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, Tom figures his deductible and nondeductible amounts as shown on Worksheet 1-2. H and r block free file online Figuring Your Reduced IRA Deduction for 2013—Example 1 Illustrated. H and r block free file online Betty figures her IRA deduction as follows. H and r block free file online Betty can treat all or part of her contributions as either deductible or nondeductible. H and r block free file online This is because her $5,500 contribution for 2013 is not subject to the deduction phaseout discussed earlier under Limit if Covered by Employer Plan . H and r block free file online She does not need to use Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, because their modified AGI is not within the phaseout range that applies. H and r block free file online Betty decides to treat her $5,500 IRA contributions as deductible. H and r block free file online The IRA deductions of $5,080 and $5,500 on the joint return for Tom and Betty total $10,580. H and r block free file online Example 2. H and r block free file online For 2013, Ed and Sue file a joint return on Form 1040. H and r block free file online They are both 39 years old. H and r block free file online Ed is covered by his employer's retirement plan. H and r block free file online Ed's salary is $45,000. H and r block free file online Sue had no compensation for the year and did not contribute to an IRA. H and r block free file online Sue is not covered by an employer plan. H and r block free file online Ed contributed $5,500 to his traditional IRA and $5,500 to a traditional IRA for Sue (a Kay Bailey Hutchison Spousal IRA). H and r block free file online Their combined modified AGI, which includes $2,000 interest and dividend income and a large capital gain from the sale of stock, is $180,555. H and r block free file online Because the combined modified AGI is $115,000 or more, Ed cannot deduct any of the contribution to his traditional IRA. H and r block free file online He can either leave the $5,500 of nondeductible contributions in his IRA or withdraw them by April 15, 2014. H and r block free file online Sue figures her IRA deduction as shown on Worksheet 1-2. H and r block free file online Figuring Your Reduced IRA Deduction for 2013—Example 2 Illustrated. H and r block free file online Worksheet 1-2. H and r block free file online Figuring Your Reduced IRA Deduction for 2013 (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status. H and r block free file online ) Note. H and r block free file online If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. H and r block free file online IF you . H and r block free file online . H and r block free file online . H and r block free file online AND your  filing status is . H and r block free file online . H and r block free file online . H and r block free file online AND your modified AGI is over . H and r block free file online . H and r block free file online . H and r block free file online THEN enter on  line 1 below . H and r block free file online . H and r block free file online . H and r block free file online       are covered by an employer plan single or head of household $59,000 $69,000     married filing jointly or qualifying widow(er) $95,000 $115,000     married filing separately $0 $10,000     are not covered by an employer plan, but your spouse is covered married filing jointly $178,000 $188,000     married filing separately $0 $10,000     1. H and r block free file online Enter applicable amount from table above 1. H and r block free file online   2. H and r block free file online Enter your modified AGI (that of both spouses, if married filing jointly) 2. H and r block free file online     Note. H and r block free file online If line 2 is equal to or more than the amount on line 1, stop here. H and r block free file online  Your IRA contributions are not deductible. H and r block free file online See Nondeductible Contributions , earlier. H and r block free file online     3. H and r block free file online Subtract line 2 from line 1. H and r block free file online If line 3 is $10,000 or more ($20,000 or more if married filing jointly or qualifying widow(er) and you are covered by an employer plan), stop here. H and r block free file online You can take a full IRA deduction for contributions of up to $5,500 ($6,500 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. H and r block free file online   4. H and r block free file online Multiply line 3 by the percentage below that applies to you. H and r block free file online If the result is not a multiple of $10, round it to the next highest multiple of $10. H and r block free file online (For example, $611. H and r block free file online 40 is rounded to $620. H and r block free file online ) However, if the result is less than $200, enter $200. H and r block free file online         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. H and r block free file online 5% (. H and r block free file online 275) (by 32. H and r block free file online 5% (. H and r block free file online 325) if you are age 50 or older). H and r block free file online All others, multiply line 3 by 55% (. H and r block free file online 55) (by 65% (. H and r block free file online 65) if you are age 50 or older). H and r block free file online 4. H and r block free file online   5. H and r block free file online Enter your compensation minus any deductions on Form 1040 or Form 1040NR, line 27 (deductible part of self-employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). H and r block free file online If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. H and r block free file online If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. H and r block free file online   6. H and r block free file online Enter contributions made, or to be made, to your IRA for 2013, but do not enter more than $5,500 ($6,500 if you are age 50 or older). H and r block free file online If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. H and r block free file online 6. H and r block free file online   7. H and r block free file online IRA deduction. H and r block free file online Compare lines 4, 5, and 6. H and r block free file online Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 1040NR line for your IRA, whichever applies. H and r block free file online If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. H and r block free file online   8. H and r block free file online Nondeductible contribution. H and r block free file online Subtract line 7 from line 5 or 6, whichever is smaller. H and r block free file online  Enter the result here and on line 1 of your Form 8606 8. H and r block free file online   Worksheet 1-2. H and r block free file online Figuring Your Reduced IRA Deduction for 2013—Example 1 Illustrated (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status. H and r block free file online ) Note. H and r block free file online If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. H and r block free file online IF you . H and r block free file online . H and r block free file online . H and r block free file online AND your  filing status is . H and r block free file online . H and r block free file online . H and r block free file online AND your modified AGI is over . H and r block free file online . H and r block free file online . H and r block free file online THEN enter on  line 1 below . H and r block free file online . H and r block free file online . H and r block free file online       are covered by an employer plan single or head of household $59,000 $69,000     married filing jointly or qualifying widow(er) $95,000 $115,000     married filing separately $0 $10,000     are not covered by an employer plan, but your spouse is covered married filing jointly $178,000 $188,000     married filing separately $0 $10,000     1. H and r block free file online Enter applicable amount from table above 1. H and r block free file online 115,000 2. H and r block free file online Enter your modified AGI (that of both spouses, if married filing jointly) 2. H and r block free file online 96,555   Note. H and r block free file online If line 2 is equal to or more than the amount on line 1, stop here. H and r block free file online  Your IRA contributions are not deductible. H and r block free file online See Nondeductible Contributions , earlier. H and r block free file online     3. H and r block free file online Subtract line 2 from line 1. H and r block free file online If line 3 is $10,000 or more ($20,000 or more if married filing jointly or qualifying widow(er) and you are covered by an employer plan), stop here. H and r block free file online You can take a full IRA deduction for contributions of up to $5,500 ($6,500 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. H and r block free file online 18,445 4. H and r block free file online Multiply line 3 by the percentage below that applies to you. H and r block free file online If the result is not a multiple of $10, round it to the next highest multiple of $10. H and r block free file online (For example, $611. H and r block free file online 40 is rounded to $620. H and r block free file online ) However, if the result is less than $200, enter $200. H and r block free file online         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. H and r block free file online 5% (. H and r block free file online 275) (by 32. H and r block free file online 5% (. H and r block free file online 325) if you are age 50 or older). H and r block free file online All others, multiply line 3 by 55% (. H and r block free file online 55) (by 65% (. H and r block free file online 65) if you are age 50 or older). H and r block free file online 4. H and r block free file online 5,080 5. H and r block free file online Enter your compensation minus any deductions on Form 1040 or Form 1040NR, line 27 (deductible part of self-employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). H and r block free file online If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. H and r block free file online If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. H and r block free file online 59,000 6. H and r block free file online Enter contributions made, or to be made, to your IRA for 2013, but do not enter more than $5,500 ($6,500 if you are age 50 or older). H and r block free file online If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. H and r block free file online 6. H and r block free file online 5,500 7. H and r block free file online IRA deduction. H and r block free file online Compare lines 4, 5, and 6. H and r block free file online Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 1040NR line for your IRA, whichever applies. H and r block free file online If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. H and r block free file online 5,080 8. H and r block free file online Nondeductible contribution. H and r block free file online Subtract line 7 from line 5 or 6, whichever is smaller. H and r block free file online  Enter the result here and on line 1 of your Form 8606 8. H and r block free file online 420 Worksheet 1-2. H and r block free file online Figuring Your Reduced IRA Deduction for 2013—Example 2 Illustrated (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status. H and r block free file online ) Note. H and r block free file online If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. H and r block free file online IF you . H and r block free file online . H and r block free file online . H and r block free file online AND your  filing status is . H and r block free file online . H and r block free file online . H and r block free file online AND your modified AGI is over . H and r block free file online . H and r block free file online . H and r block free file online THEN enter on  line 1 below . H and r block free file online . H and r block free file online . H and r block free file online       are covered by an employer plan single or head of household $59,000 $69,000     married filing jointly or qualifying widow(er) $95,000 $115,000     married filing separately $0 $10,000     are not covered by an employer plan, but your spouse is covered married filing jointly $178,000 $188,000     married filing separately $0 $10,000     1. H and r block free file online Enter applicable amount from table above 1. H and r block free file online 188,000 2. H and r block free file online Enter your modified AGI (that of both spouses, if married filing jointly) 2. H and r block free file online 180,555   Note. H and r block free file online If line 2 is equal to or more than the amount on line 1, stop here. H and r block free file online  Your IRA contributions are not deductible. H and r block free file online See Nondeductible Contributions , earlier. H and r block free file online     3. H and r block free file online Subtract line 2 from line 1. H and r block free file online If line 3 is $10,000 or more ($20,000 or more if married filing jointly or qualifying widow(er) and you are covered by an employer plan), stop here. H and r block free file online You can take a full IRA deduction for contributions of up to $5,500 ($6,500 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. H and r block free file online 7,445 4. H and r block free file online Multiply line 3 by the percentage below that applies to you. H and r block free file online If the result is not a multiple of $10, round it to the next highest multiple of $10. H and r block free file online (For example, $611. H and r block free file online 40 is rounded to $620. H and r block free file online ) However, if the result is less than $200, enter $200. H and r block free file online         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. H and r block free file online 5% (. H and r block free file online 275) (by 32. H and r block free file online 5% (. H and r block free file online 325) if you are age 50 or older). H and r block free file online All others, multiply line 3 by 55% (. H and r block free file online 55) (by 65% (. H and r block free file online 65) if you are age 50 or older). H and r block free file online 4. H and r block free file online 4,100 5. H and r block free file online Enter your compensation minus any deductions on Form 1040 or Form 1040NR, line 27 (deductible part of self-employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). H and r block free file online If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. H and r block free file online If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. H and r block free file online 39,500 6. H and r block free file online Enter contributions made, or to be made, to your IRA for 2013, but do not enter more than $5,500 ($6,500 if you are age 50 or older). H and r block free file online If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. H and r block free file online 6. H and r block free file online 5,500 7. H and r block free file online IRA deduction. H and r block free file online Compare lines 4, 5, and 6. H and r block free file online Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 1040NR line for your IRA, whichever applies. H and r block free file online If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. H and r block free file online 4,100 8. H and r block free file online Nondeductible contribution. H and r block free file online Subtract line 7 from line 5 or 6, whichever is smaller. H and r block free file online  Enter the result here and on line 1 of your Form 8606 8. H and r block free file online 1,400 What if You Inherit an IRA? If you inherit a traditional IRA, you are called a beneficiary. H and r block free file online A beneficiary can be any person or entity the owner chooses to receive the benefits of the IRA after he or she dies. H and r block free file online Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive. H and r block free file online Inherited from spouse. H and r block free file online   If you inherit a traditional IRA from your spouse, you generally have the following three choices. H and r block free file online You can: Treat it as your own IRA by designating yourself as the account owner. H and r block free file online Treat it as your own by rolling it over into your IRA, or to the extent it is taxable, into a: Qualified employer plan, Qualified employee annuity plan (section 403(a) plan), Tax-sheltered annuity plan (s
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Understanding Your CP2566R Notice

We previously sent you a CP63 notice informing you we are holding your refund until we receive one or more unfiled tax returns. Because we received no reply to our previous notice, we have calculated your tax, penalty and interest based on wages and other income reported to us by employers, financial institutions and others.


What you need to do

  • File your tax return immediately, or
  • Accept our proposed assessment by signing and returning the Response form, or
  • Call us if you think you don't have to file.

You may want to…


Answers to Common Questions

What should I do if I disagree with the notice?

Call us at the toll free number listed on the top right corner of your notice. Please have your paperwork ready when you call. If you prefer, you can write to us using the notice's response form and return address listed.

Where do I send my return?

Attach the Response form and send the return to the address listed on the notice.

What should I do if I've just filed my tax return?

You don't have to do anything if you filed your tax return(s) within the last eight weeks.

What should I do if I didn't file my tax return or it's been more than eight weeks since I filed it?

Complete the Response form from your notice. Check the name, Social Security number (or Taxpayer Identification Number), and tax year on your notice. Make sure they match the name, number, and year on the return. Mail us a copy of the tax return. Sign the return and date it; if filing a joint return your spouse must also sign the return. Send the return with the Response form to the address listed on the notice.

What happens if I can't pay the full amount I owe when I file my return?

You can make a payment plan with us. If you owe tax on any return(s) you file, we will use your refund to help pay it.


Tips for next year

File your return on time.

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.

Page Last Reviewed or Updated: 28-Feb-2014

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The H And R Block Free File Online

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