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2012 Tax Amendment Form

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2012 Tax Amendment Form

2012 tax amendment form 2. 2012 tax amendment form   Tax Shelters and Other Reportable Transactions Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Abusive Tax SheltersRules To Curb Abusive Tax Shelters Investor Reporting Penalties Whether To Invest Introduction Investments that yield tax benefits are sometimes called “tax shelters. 2012 tax amendment form ” In some cases, Congress has concluded that the loss of revenue is an acceptable side effect of special tax provisions designed to encourage taxpayers to make certain types of investments. 2012 tax amendment form In many cases, however, losses from tax shelters produce little or no benefit to society, or the tax benefits are exaggerated beyond those intended. 2012 tax amendment form Those cases are called “abusive tax shelters. 2012 tax amendment form ” An investment that is considered a tax shelter is subject to restrictions, including the requirement that it be disclosed, as discussed later. 2012 tax amendment form Topics - This chapter discusses: Abusive Tax Shelters , Rules To Curb Abusive Tax Shelters , Investor Reporting , Penalties , and Whether To Invest . 2012 tax amendment form Useful Items - You may want to see: Publication 538 Accounting Periods and Methods 556 Examination of Returns, Appeal Rights, and Claims for Refund 561 Determining the Value of Donated Property 925 Passive Activity and At-Risk Rules Form (and Instructions) 8275 Disclosure Statement 8275-R Regulation Disclosure Statement 8283 Noncash Charitable Contributions 8886 Reportable Transaction Disclosure Statement See chapter 5, How To Get Tax Help , for information about getting these publications and forms. 2012 tax amendment form Abusive Tax Shelters Abusive tax shelters are marketing schemes involving artificial transactions with little or no economic reality. 2012 tax amendment form They often make use of unrealistic allocations, inflated appraisals, losses in connection with nonrecourse loans, mismatching of income and deductions, financing techniques that do not conform to standard commercial business practices, or mischaracterization of the substance of the transaction. 2012 tax amendment form Despite appearances to the contrary, the taxpayer generally risks little. 2012 tax amendment form Abusive tax shelters commonly involve package deals designed from the start to generate losses, deductions, or credits that will be far more than present or future investment. 2012 tax amendment form Or, they may promise investors from the start that future inflated appraisals will enable them, for example, to reap charitable contribution deductions based on those appraisals. 2012 tax amendment form (But see the appraisal requirements discussed under Rules To Curb Abusive Tax Shelters , later. 2012 tax amendment form ) They are commonly marketed in terms of the ratio of tax deductions allegedly available to each dollar invested. 2012 tax amendment form This ratio (or “write-off”) is frequently said to be several times greater than one-to-one. 2012 tax amendment form Because there are many abusive tax shelters, it is not possible to list all the factors you should consider in determining whether an offering is an abusive tax shelter. 2012 tax amendment form However, you should ask the following questions, which might provide a clue to the abusive nature of the plan. 2012 tax amendment form Do the tax benefits far outweigh the economic benefits? Is this a transaction you would seriously consider, apart from the tax benefits, if you hoped to make a profit? Do shelter assets really exist and, if so, are they insured for less than their purchase price? Is there a nontax justification for the way profits and losses are allocated to partners? Do the facts and supporting documents make economic sense? In that connection, are there sales and resales of the tax shelter property at ever increasing prices? Does the investment plan involve a gimmick, device, or sham to hide the economic reality of the transaction? Does the promoter offer to backdate documents after the close of the year? Are you instructed to backdate checks covering your investment? Is your debt a real debt or are you assured by the promoter that you will never have to pay it? Does this transaction involve laundering United States source income through foreign corporations incorporated in a tax haven and owned by United States shareholders? Rules To Curb Abusive Tax Shelters Congress has enacted a series of income tax laws designed to halt the growth of abusive tax shelters. 2012 tax amendment form These provisions include the following. 2012 tax amendment form Disclosure of reportable transactions. 2012 tax amendment form   You must disclose information for each reportable transaction in which you participate. 2012 tax amendment form See Reportable Transaction Disclosure Statement , later. 2012 tax amendment form   Material advisors with respect to any reportable transaction must disclose information about the transaction on Form 8918, Material Advisor Disclosure Statement. 2012 tax amendment form To determine whether you are a material advisor to a transaction, see the Instructions for Form 8918. 2012 tax amendment form   Material advisors will receive a reportable transaction number for the disclosed reportable transaction. 2012 tax amendment form They must provide this number to all persons to whom they acted as a material advisor. 2012 tax amendment form They must provide the number at the time the transaction is entered into. 2012 tax amendment form If they do not have the number at that time, they must provide it within 60 days from the date the number is mailed to them. 2012 tax amendment form For information on penalties for failure to disclose and failure to maintain lists, see Internal Revenue Code sections 6707, 6707A, and 6708. 2012 tax amendment form Requirement to maintain list. 2012 tax amendment form   Material advisors must maintain a list of persons to whom they provide material aid, assistance, or advice on any reportable transaction. 2012 tax amendment form The list must be available for inspection by the IRS, and the information required to be included on the list generally must be kept for 7 years. 2012 tax amendment form See Regulations section 301. 2012 tax amendment form 6112-1 for more information (including what information is required to be included on the list). 2012 tax amendment form Confidentiality privilege. 2012 tax amendment form   The confidentiality privilege between you and a federally authorized tax practitioner does not apply to written communications made after October 21, 2004, regarding the promotion of your direct or indirect participation in any tax shelter. 2012 tax amendment form Appraisal requirement for donated property. 2012 tax amendment form   If you claim a deduction of more than $5,000 for an item or group of similar items of donated property, you generally must get a qualified appraisal from a qualified appraiser and complete and attach section B of Form 8283 to your return. 2012 tax amendment form If you claim a deduction of more than $500,000 for the donated property, you generally must attach the qualified appraisal to your return. 2012 tax amendment form If you file electronically, see Form 8453, U. 2012 tax amendment form S. 2012 tax amendment form Individual Income Tax Transmittal for an IRS e-file Return, and its instructions. 2012 tax amendment form For more information about appraisals, including exceptions, see Publication 561. 2012 tax amendment form Passive activity loss and credit limits. 2012 tax amendment form   The passive activity loss and credit rules limit the amount of losses and credits that can be claimed from passive activities and limit the amount that can offset nonpassive income, such as certain portfolio income from investments. 2012 tax amendment form For more detailed information about determining and reporting income, losses, and credits from passive activities, see Publication 925. 2012 tax amendment form Interest on penalties. 2012 tax amendment form   If you are assessed an accuracy-related or civil fraud penalty (as discussed under Penalties , later), interest will be imposed on the amount of the penalty from the due date of the return (including any extensions) to the date you pay the penalty. 2012 tax amendment form Accounting method restriction. 2012 tax amendment form   Tax shelters generally cannot use the cash method of accounting. 2012 tax amendment form Uniform capitalization rules. 2012 tax amendment form   The uniform capitalization rules generally apply to producing property or acquiring it for resale. 2012 tax amendment form Under those rules, the direct cost and part of the indirect cost of the property must be capitalized or included in inventory. 2012 tax amendment form For more information, see Publication 538. 2012 tax amendment form Denial of deduction for interest on an underpayment due to a reportable transaction. 2012 tax amendment form   You cannot deduct any interest you paid or accrued on any part of an underpayment of tax due to an understatement arising from a reportable transaction (discussed later) if the relevant facts affecting the tax treatment of the item are not adequately disclosed. 2012 tax amendment form This rule applies to reportable transactions entered into in tax years beginning after October 22, 2004. 2012 tax amendment form Authority for Disallowance of Tax Benefits The IRS has published guidance concluding that the claimed tax benefits of various abusive tax shelters should be disallowed. 2012 tax amendment form The guidance is the conclusion of the IRS on how the law is applied to a particular set of facts. 2012 tax amendment form Guidance is published in the Internal Revenue Bulletin for taxpayers' information and also for use by IRS officials. 2012 tax amendment form So, if your return is examined and an abusive tax shelter is identified and challenged, published guidance dealing with that type of shelter, which disallows certain claimed tax shelter benefits, could serve as the basis for the examining official's challenge of the tax benefits you claimed. 2012 tax amendment form In such a case, the examiner will not compromise even if you or your representative believes you have authority for the positions taken on your tax return. 2012 tax amendment form The courts have generally been unsympathetic to taxpayers involved in abusive tax shelter schemes and have ruled in favor of the IRS in the majority of the cases in which these shelters have been challenged. 2012 tax amendment form Investor Reporting You may be required to file a reportable transaction disclosure statement. 2012 tax amendment form Reportable Transaction Disclosure Statement Use Form 8886 to disclose information for each reportable transaction (discussed later) in which you participated. 2012 tax amendment form Generally, you must attach Form 8886 to your return for each tax year in which you participated in the transaction. 2012 tax amendment form Under certain circumstances, a transaction must be disclosed within 90 days of the transaction being identified as a listed transaction or a transaction of interest (discussed later). 2012 tax amendment form In addition, for the first year Form 8886 is attached to your return, you must send a copy of the form to: Internal Revenue Service OTSA Mail Stop 4915 1973 North Rulon White Blvd. 2012 tax amendment form  Ogden, UT 84404 If you file your return electronically, the copy sent to OTSA must show exactly the same information, word for word, provided with the electronically filed return and it must be provided on the official IRS Form 8886 or an exact copy of the form. 2012 tax amendment form If you use a computer-generated or substitute Form 8886, it must be an exact copy of the official IRS form. 2012 tax amendment form If you fail to file Form 8886 as required or fail to include any required information on the form, you may have to pay a penalty. 2012 tax amendment form See Penalty for failure to disclose a reportable transaction , later under Penalties. 2012 tax amendment form The following discussion briefly describes reportable transactions. 2012 tax amendment form For more details, see the Instructions for Form 8886. 2012 tax amendment form Reportable transaction. 2012 tax amendment form   A reportable transaction is any of the following. 2012 tax amendment form A listed transaction. 2012 tax amendment form A confidential transaction. 2012 tax amendment form A transaction with contractual protection. 2012 tax amendment form A loss transaction. 2012 tax amendment form A transaction of interest entered into after November 1, 2006. 2012 tax amendment form Note. 2012 tax amendment form Transactions with a brief asset holding period were removed from the definition of reportable transaction for transactions entered into after August 2, 2007. 2012 tax amendment form Listed transaction. 2012 tax amendment form   A listed transaction is the same as, or substantially similar to, one of the types of transactions the IRS has determined to be a tax-avoidance transaction. 2012 tax amendment form These transactions have been identified in notices, regulations, and other published guidance issued by the IRS. 2012 tax amendment form For a list of existing guidance, see Notice 2009-59 in Internal Revenue Bulletin 2009-31, available at www. 2012 tax amendment form irs. 2012 tax amendment form gov/irb/2009-31_IRB/ar07. 2012 tax amendment form html. 2012 tax amendment form Confidential transaction. 2012 tax amendment form   A confidential transaction is offered to you under conditions of confidentiality and for which you have paid an advisor a minimum fee. 2012 tax amendment form A transaction is offered under conditions of confidentiality if the advisor who is paid the fee places a limit on your disclosure of the tax treatment or tax structure of the transaction and the limit protects the confidentiality of the advisor's tax strategies. 2012 tax amendment form The transaction is treated as confidential even if the conditions of confidentiality are not legally binding on you. 2012 tax amendment form Transaction with contractual protection. 2012 tax amendment form   Generally, a transaction with contractual protection is one in which you or a related party has the right to a full or partial refund of fees if all or part of the intended tax consequences of the transaction are not sustained, or a transaction for which the fees are contingent on your realizing the tax benefits from the transaction. 2012 tax amendment form For information on exceptions, see Revenue Procedure 2007-20 in Internal Revenue Bulletin 2007-7, available at www. 2012 tax amendment form irs. 2012 tax amendment form gov/irb/2007-07_IRB/ar15. 2012 tax amendment form html. 2012 tax amendment form Loss transaction. 2012 tax amendment form   For individuals, a loss transaction is one that results in a deductible loss if the gross amount of the loss is at least $2 million in a single tax year or $4 million in any combination of tax years. 2012 tax amendment form A loss from a foreign currency transaction under Internal Revenue Code section 988 is a loss transaction if the gross amount of the loss is at least $50,000 in a single tax year, whether or not the loss flows through from an S corporation or partnership. 2012 tax amendment form   Certain losses (such as losses from casualties, thefts, and condemnations) are excepted from this category and do not have to be reported on Form 8886. 2012 tax amendment form For information on other exceptions, see Revenue Procedure 2004-66 in Internal Revenue Bulletin 2004-50, as modified and superseded by Revenue Procedure 2013-11, (or future published guidance) available at www. 2012 tax amendment form irs. 2012 tax amendment form gov/irb/2004-50_IRB/ar11. 2012 tax amendment form html. 2012 tax amendment form Transaction of interest. 2012 tax amendment form   A transaction of interest is a transaction entered into after November 1, 2006, that is the same as, or substantially similar to, one of the types of transactions that the IRS has identified by notice, regulation, or other form of published guidance as a transaction of interest. 2012 tax amendment form The IRS has identified the following transactions of interest. 2012 tax amendment form “Toggling” grantor trusts as described in Notice 2007-73, 2007-36 I. 2012 tax amendment form R. 2012 tax amendment form B. 2012 tax amendment form 545, available at www. 2012 tax amendment form irs. 2012 tax amendment form gov/irb/2007-36_IRB/ar20. 2012 tax amendment form html. 2012 tax amendment form Certain transactions involving contributions of a successor member interest in a limited liability company as described in Notice 2007-72, 2007-36 I. 2012 tax amendment form R. 2012 tax amendment form B. 2012 tax amendment form 544, available at www. 2012 tax amendment form irs. 2012 tax amendment form gov/irb/2007-36_IRB/ar19. 2012 tax amendment form html. 2012 tax amendment form Certain transactions involving the sale or other disposition of all interests in a charitable remainder trust and claiming little or no taxable gain as described in Notice 2008-99, 2008-47 I. 2012 tax amendment form R. 2012 tax amendment form B. 2012 tax amendment form 1194, available at www. 2012 tax amendment form irs. 2012 tax amendment form gov/irb/2008-47_IRB/ar11. 2012 tax amendment form html. 2012 tax amendment form Certain transactions involving a U. 2012 tax amendment form S. 2012 tax amendment form taxpayer owning controlled foreign corporations (CFCs) that hold stock of a lower-tier CFC through a domestic partnership to avoid reporting income as described in Notice 2009-7, 2009-3 I. 2012 tax amendment form R. 2012 tax amendment form B. 2012 tax amendment form 312, available at www. 2012 tax amendment form irs. 2012 tax amendment form gov/irb/2009-03_IRB/ar10. 2012 tax amendment form html. 2012 tax amendment form   For updates to this list, go to www. 2012 tax amendment form irs. 2012 tax amendment form gov/Businesses/Corporations/Abusive-Tax-Shelters-and-Transactions. 2012 tax amendment form Penalties Investing in an abusive tax shelter may lead to substantial expenses. 2012 tax amendment form First, the promoter generally charges a substantial fee. 2012 tax amendment form If your return is examined by the IRS and a tax deficiency is determined, you will be faced with payment of more tax, interest on the underpayment, possibly a 20%, 30%, or even 40% accuracy-related penalty, or a 75% civil fraud penalty. 2012 tax amendment form You may also be subject to the penalty for failure to pay tax. 2012 tax amendment form These penalties are explained in the following paragraphs. 2012 tax amendment form Accuracy-related penalties. 2012 tax amendment form   An accuracy-related penalty of 20% can be imposed for underpayments of tax due to: Negligence or disregard of rules or regulations, Substantial understatement of tax, Substantial valuation misstatement (increased to 40% for gross valuation misstatement), Transaction lacking economic substance (increased to 40% for undisclosed transaction lacking economic substance), or Undisclosed foreign financial asset understatement (40% in all cases). 2012 tax amendment form Except for a transaction lacking economic substance, this penalty will not be imposed if you can show you had reasonable cause for any understatement of tax and that you acted in good faith. 2012 tax amendment form Your failure to disclose a reportable transaction is a strong indication that you failed to act in good faith. 2012 tax amendment form   If you are charged an accuracy-related penalty, interest will be imposed on the amount of the penalty from the due date of the return (including extensions) to the date you pay the penalty. 2012 tax amendment form   The 20% penalties do not apply to any underpayment attributable to a reportable transaction understatement subject to an accuracy-related penalty (discussed later). 2012 tax amendment form Negligence or disregard of rules or regulations. 2012 tax amendment form   The penalty for negligence or disregard of rules or regulations is imposed only on the part of the underpayment due to negligence or disregard of rules or regulations. 2012 tax amendment form The penalty will not be charged if you can show you had reasonable cause for understating your tax and that you acted in good faith. 2012 tax amendment form    Negligence includes any failure to make a reasonable attempt to comply with the provisions of the Internal Revenue Code. 2012 tax amendment form It also includes any failure to keep adequate books and records. 2012 tax amendment form A return position that has a reasonable basis is not negligence. 2012 tax amendment form   Disregard includes any careless, reckless, or intentional disregard of rules or regulations. 2012 tax amendment form   The penalty for disregard of rules and regulations can be avoided if all the following are true. 2012 tax amendment form You keep adequate books and records. 2012 tax amendment form You have a reasonable basis for your position on the tax issue. 2012 tax amendment form You make an adequate disclosure of your position. 2012 tax amendment form Use Form 8275 to make your disclosure and attach it to your return. 2012 tax amendment form To disclose a position contrary to a regulation, use Form 8275-R. 2012 tax amendment form Use Form 8886 to disclose a reportable transaction (discussed earlier). 2012 tax amendment form Substantial understatement of tax. 2012 tax amendment form   An understatement is considered to be substantial if it is more than the greater of: 10% of the tax required to be shown on the return, or $5,000. 2012 tax amendment form An “understatement” is the amount of tax required to be shown on your return for a tax year minus the amount of tax shown on the return, reduced by any rebates. 2012 tax amendment form The term “rebate” generally means a decrease in the tax shown on your original return as the result of your filing an amended return or claim for refund. 2012 tax amendment form   For items other than tax shelters, you can file Form 8275 or Form 8275-R to disclose items that could cause a substantial understatement of income tax. 2012 tax amendment form In that way, you can avoid the substantial understatement penalty if you have a reasonable basis for your position on the tax issue. 2012 tax amendment form Disclosure of the tax shelter item on a tax return does not reduce the amount of the understatement. 2012 tax amendment form   Also, the understatement penalty will not be imposed if you can show there was reasonable cause for the underpayment caused by the understatement and that you acted in good faith. 2012 tax amendment form An important factor in establishing reasonable cause and good faith will be the extent of your effort to determine your proper tax liability under the law. 2012 tax amendment form Substantial valuation misstatement. 2012 tax amendment form   In general, you are liable for a 20% penalty for a substantial valuation misstatement if all the following are true. 2012 tax amendment form The value or adjusted basis of any property claimed on the return is 150% or more of the correct amount. 2012 tax amendment form You underpaid your tax by more than $5,000 because of the misstatement. 2012 tax amendment form You cannot establish that you had reasonable cause for the underpayment and that you acted in good faith. 2012 tax amendment form   You may be assessed a penalty of 40% for a gross valuation misstatement. 2012 tax amendment form If you misstate the value or the adjusted basis of property by 200% or more of the amount determined to be correct, you will be assessed a penalty of 40%, instead of 20%, of the amount you underpaid because of the gross valuation misstatement. 2012 tax amendment form The penalty rate is also 40% if the property's correct value or adjusted basis is zero. 2012 tax amendment form Transaction lacking economic substance. 2012 tax amendment form   The economic substance doctrine only applies to an individual that entered into a transaction in connection with a trade or business or an activity engaged in for the production of income. 2012 tax amendment form For transactions entered into after March 30, 2010, a transaction has economic substance for you as an individual taxpayer only if: The transaction changes your economic position in a meaningful way (apart from federal income tax effects), or You have a substantial purpose (apart from federal income tax effects) for entering into the transaction. 2012 tax amendment form   For purposes of determining whether economic substance exists, a transaction's profit potential will only be taken into account if the present value of the reasonably expected pre-tax profit from the transaction is substantial compared to the present value of the expected net tax benefits that would be allowed if the transaction were respected. 2012 tax amendment form   If any part of your underpayment is due to any disallowance of claimed tax benefits by reason of a transaction lacking economic substance or failing to meet the requirements of any similar rule of law, that part of your underpayment will be subject to the 20% accuracy-related penalty even if you had a reasonable cause and acted in good faith concerning that part. 2012 tax amendment form   Additionally, the penalty increases to 40% if you do not adequately disclose on your return or in a statement attached to your return the relevant facts affecting the tax treatment of a transaction that lacks economic substance. 2012 tax amendment form Relevant facts include any facts affecting the tax treatment of the transaction. 2012 tax amendment form    Any excessive amount of an erroneous claim for an income tax refund or credit (other than a refund or credit related to the earned income credit) that results from a transaction found to be lacking economic substance will not be treated as having a reasonable basis and could be subject to a 20% penalty. 2012 tax amendment form Undisclosed foreign financial asset understatement. 2012 tax amendment form   For tax years beginning after March 18, 2010, you may be liable for a 40% penalty for an understatement of your tax liability due to an undisclosed foreign financial asset. 2012 tax amendment form An undisclosed foreign financial asset is any asset for which an information return, required to be provided under Internal Revenue Code section 6038, 6038B, 6038D, 6046A, or 6048 for any taxable year, is not provided. 2012 tax amendment form The penalty applies to any part of an underpayment related to the following undisclosed foreign financial assets. 2012 tax amendment form Any foreign business you control, reportable on Form 5471, Information Return of U. 2012 tax amendment form S. 2012 tax amendment form Persons With Respect To Certain Foreign Corporations, or Form 8865, Return of U. 2012 tax amendment form S. 2012 tax amendment form Persons With Respect to Certain Foreign Partnerships. 2012 tax amendment form Certain transfers of property to a foreign corporation or partnership, reportable on Form 926, Return by a U. 2012 tax amendment form S. 2012 tax amendment form Transferor of Property to a Foreign Corporation, or certain distributions to a foreign person, reportable on Form 8865. 2012 tax amendment form Your ownership interest in certain foreign financial assets, temporarily reportable on Form 8275 or 8275-R. 2012 tax amendment form    Instead of, or in addition to, Form 8275 or 8275-R, you may have to file Form 8938, Statement of Specified Foreign Financial Assets, with your tax return. 2012 tax amendment form See the Instructions for Form 8938 for details. 2012 tax amendment form    Your acquisition, disposition, or substantial change in ownership interest in a foreign partnership, reportable on Form 8865. 2012 tax amendment form Creation or transfer of money or property to certain foreign trusts, reportable on Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts. 2012 tax amendment form Penalty for incorrect appraisals. 2012 tax amendment form   The person who prepares an appraisal of the value of property may have to pay a penalty if: He or she knows, or reasonably should have known, that the appraisal would be used in connection with a return or claim for refund; and The claimed value of the property on a return or claim for refund based on that appraisal results in a substantial valuation misstatement or a gross valuation misstatement as discussed earlier. 2012 tax amendment form For details on the penalty amount and exceptions, see Publication 561. 2012 tax amendment form Penalty for failure to disclose a reportable transaction. 2012 tax amendment form   If you fail to include any required information regarding a reportable transaction (discussed earlier) on a return or statement, you may have to pay a penalty of 75% of the decrease in tax shown on your return as a result of such transaction (or that would have resulted if the transaction were respected for federal tax purposes). 2012 tax amendment form For an individual, the minimum penalty is $5,000 and the maximum is $10,000 (or $100,000 for a listed transaction). 2012 tax amendment form This penalty is in addition to any other penalty that may be imposed. 2012 tax amendment form   The IRS may rescind or abate the penalty for failing to disclose a reportable transaction under certain limited circumstances but cannot rescind the penalty for failing to disclose a listed transaction. 2012 tax amendment form For information on rescission, see Revenue Procedure 2007-21 in Internal Revenue Bulletin 2007-9 available at www. 2012 tax amendment form irs. 2012 tax amendment form gov/irb/2007-09_IRB/ar12. 2012 tax amendment form html. 2012 tax amendment form Accuracy-related penalty for a reportable transaction understatement. 2012 tax amendment form   If you have a reportable transaction understatement, you may have to pay a penalty equal to 20% of the amount of that understatement. 2012 tax amendment form This applies to any item due to a listed transaction or other reportable transaction with a significant purpose of avoiding or evading federal income tax. 2012 tax amendment form The penalty is 30% rather than 20% for the part of any reportable transaction understatement if the transaction was not properly disclosed. 2012 tax amendment form You may not have to pay the 20% penalty if you meet the strengthened reasonable cause and good faith exception. 2012 tax amendment form The reasonable cause and good faith exception does not apply to any part of a reportable transaction understatement attributable to one or more transactions that lack economic substance. 2012 tax amendment form   This penalty does not apply to the part of an understatement on which the fraud penalty, gross valuation misstatement penalty, or penalty for nondisclosure of noneconomic substance transactions is imposed. 2012 tax amendment form Civil fraud penalty. 2012 tax amendment form   If any underpayment of tax on your return is due to fraud, a penalty of 75% of the underpayment will be added to your tax. 2012 tax amendment form Joint return. 2012 tax amendment form   The fraud penalty on a joint return applies to a spouse only if some part of the underpayment is due to the fraud of that spouse. 2012 tax amendment form Failure to pay tax. 2012 tax amendment form   If a deficiency is assessed and is not paid within 10 days of the demand for payment, an investor can be penalized with up to a 25% addition to tax if the failure to pay continues. 2012 tax amendment form Whether To Invest In light of the adverse tax consequences and the substantial amount of penalties and interest that will result if the claimed tax benefits are disallowed, you should consider tax shelter investments carefully and seek competent legal and financial advice. 2012 tax amendment form Prev  Up  Next   Home   More Online Publications
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Understanding Your CP102 Notice

We made changes to your return because we believe there’s a miscalculation. You owe money on your taxes as a result of these changes.


What you need to do

  • Read your notice carefully—it will explain why you owe.
  • Compare the figures on the notice with your tax return.
  • Pay the amount owed by the date on the notice’s payment coupon.
  • Make payment arrangements if you can’t pay the full amount you owe.
  • Contact us within 60 days of the date of your notice if you disagree with the change(s) we made.
  • If you agree with our change(s), correct the copy of your tax return that you kept for your records.

You may want to...


  • Answers to common questions

    How can I find out what caused my tax return to change?
    Please contact us at the number listed on your notice for specific information about your tax return.

    What should I do if I disagree with the changes you made?
    If you disagree, contact us at the toll free number listed on the top right corner of your notice. If you contact us in writing within 60 days of the date of this notice, we’ll reverse the change we made to your account. However, if you’re unable to provide us additional information that justifies the reversal and we believe the reversal is in error, we’ll forward your case for audit. This step gives you formal appeal rights, including the right to appeal our decision in court before you have to pay the additional tax. After we forward your case, the audit staff will contact you within five to six weeks to fully explain the audit process and your rights. If you don’t contact us within the 60-day period, you’ll lose your right to appeal our decision before payment of tax. If you don’t contact us within 60 days, the change won’t be reversed and you must pay the additional tax. You may then file a claim for refund. You must submit the claim within three years of the date you filed the tax return, or within two years of the date of your last payment for this tax.

    What happens if I can’t pay the full amount I owe?
    You can arrange to make a payment plan with us if you can’t pay the full amount you owe.

    Am I charged interest on the money I owe?
    Not if you pay the full amount you owe by the date on the payment coupon. However interest accrues on the unpaid balance after that date.

    Will I receive a penalty if I can’t pay the full amount?
    Yes, you will receive a late payment penalty. You can contact us at the number given on your notice if you’re unable to pay the full amount shown in your specific notice because of circumstances beyond your control. Contact us by the due date of your payment and, depending on your situation, we may be able to remove the penalty.


    Tips for next year

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

Page Last Reviewed or Updated: 24-Mar-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 2012 Tax Amendment Form

2012 tax amendment form 1. 2012 tax amendment form   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. 2012 tax amendment form When repayment contributions can be made. 2012 tax amendment form No deduction. 2012 tax amendment form Reserve component. 2012 tax amendment form Figuring your IRA deduction. 2012 tax amendment form Reporting the repayment. 2012 tax amendment form Example. 2012 tax amendment form 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. 2012 tax amendment form 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. 2012 tax amendment form Can You Move Retirement Plan Assets?Transfers to Roth IRAs from other retirement plans. 2012 tax amendment form 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. 2012 tax amendment form 2013 Reporting. 2012 tax amendment form Additional reporting requirements if you made the election to treat a January 2013 QCD as made in 2012. 2012 tax amendment form One-time transfer. 2012 tax amendment form Testing period rules apply. 2012 tax amendment form More information. 2012 tax amendment form 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. 2012 tax amendment form  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. 2012 tax amendment form 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. 2012 tax amendment form For more information, see How Much Can Be Contributed? in this chapter. 2012 tax amendment form Modified AGI limit for traditional IRA contributions increased. 2012 tax amendment form  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. 2012 tax amendment form 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. 2012 tax amendment form If your modified AGI is $188,000 or more, you cannot take a deduction for contributions to a traditional IRA. 2012 tax amendment form See How Much Can You Deduct? in this chapter. 2012 tax amendment form Net Investment Income Tax. 2012 tax amendment form  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). 2012 tax amendment form However, these distributions are taken into account when determining the modified adjusted gross income threshold. 2012 tax amendment form Distributions from a nonqualified retirement plan are included in net investment income. 2012 tax amendment form See Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions for more information. 2012 tax amendment form What's New for 2014 Modified AGI limit for traditional IRA contributions increased. 2012 tax amendment form  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. 2012 tax amendment form 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. 2012 tax amendment form If your modified AGI is $191,000 or more, you cannot take a deduction for contributions to a traditional IRA. 2012 tax amendment form Introduction This chapter discusses the original IRA. 2012 tax amendment form In this publication the original IRA (sometimes called an ordinary or regular IRA) is referred to as a “traditional IRA. 2012 tax amendment form ” A traditional IRA is any IRA that is not a Roth IRA or a SIMPLE IRA. 2012 tax amendment form 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. 2012 tax amendment form Generally, amounts in your IRA, including earnings and gains, are not taxed until they are distributed. 2012 tax amendment form 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. 2012 tax amendment form You can have a traditional IRA whether or not you are covered by any other retirement plan. 2012 tax amendment form However, you may not be able to deduct all of your contributions if you or your spouse is covered by an employer retirement plan. 2012 tax amendment form See How Much Can You Deduct , later. 2012 tax amendment form Both spouses have compensation. 2012 tax amendment form   If both you and your spouse have compensation and are under age 70½, each of you can open an IRA. 2012 tax amendment form You cannot both participate in the same IRA. 2012 tax amendment form If you file a joint return, only one of you needs to have compensation. 2012 tax amendment form What Is Compensation? Generally, compensation is what you earn from working. 2012 tax amendment form For a summary of what compensation does and does not include, see Table 1-1. 2012 tax amendment form Compensation includes all of the items discussed next (even if you have more than one type). 2012 tax amendment form Wages, salaries, etc. 2012 tax amendment form   Wages, salaries, tips, professional fees, bonuses, and other amounts you receive for providing personal services are compensation. 2012 tax amendment form 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). 2012 tax amendment form Scholarship and fellowship payments are compensation for IRA purposes only if shown in box 1 of Form W-2. 2012 tax amendment form Commissions. 2012 tax amendment form   An amount you receive that is a percentage of profits or sales price is compensation. 2012 tax amendment form Self-employment income. 2012 tax amendment form   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. 2012 tax amendment form   Compensation includes earnings from self-employment even if they are not subject to self-employment tax because of your religious beliefs. 2012 tax amendment form Self-employment loss. 2012 tax amendment form   If you have a net loss from self-employment, do not subtract the loss from your salaries or wages when figuring your total compensation. 2012 tax amendment form Alimony and separate maintenance. 2012 tax amendment form   For IRA purposes, compensation includes any taxable alimony and separate maintenance payments you receive under a decree of divorce or separate maintenance. 2012 tax amendment form Nontaxable combat pay. 2012 tax amendment form   If you were a member of the U. 2012 tax amendment form S. 2012 tax amendment form Armed Forces, compensation includes any nontaxable combat pay you received. 2012 tax amendment form This amount should be reported in box 12 of your 2013 Form W-2 with code Q. 2012 tax amendment form Table 1-1. 2012 tax amendment form Compensation for Purposes of an IRA Includes . 2012 tax amendment form . 2012 tax amendment form . 2012 tax amendment form Does not include . 2012 tax amendment form . 2012 tax amendment form . 2012 tax amendment form   earnings and profits from property. 2012 tax amendment form wages, salaries, etc. 2012 tax amendment form     interest and dividend income. 2012 tax amendment form commissions. 2012 tax amendment form     pension or annuity income. 2012 tax amendment form self-employment income. 2012 tax amendment form     deferred compensation. 2012 tax amendment form alimony and separate maintenance. 2012 tax amendment form     income from certain  partnerships. 2012 tax amendment form nontaxable combat pay. 2012 tax amendment form     any amounts you exclude from income. 2012 tax amendment form     What Is Not Compensation? Compensation does not include any of the following items. 2012 tax amendment form Earnings and profits from property, such as rental income, interest income, and dividend income. 2012 tax amendment form Pension or annuity income. 2012 tax amendment form Deferred compensation received (compensation payments postponed from a past year). 2012 tax amendment form Income from a partnership for which you do not provide services that are a material income-producing factor. 2012 tax amendment form Conservation Reserve Program (CRP) payments reported on Schedule SE (Form 1040), line 1b. 2012 tax amendment form Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs. 2012 tax amendment form When Can a Traditional IRA Be Opened? You can open a traditional IRA at any time. 2012 tax amendment form However, the time for making contributions for any year is limited. 2012 tax amendment form See When Can Contributions Be Made , later. 2012 tax amendment form How Can a Traditional IRA Be Opened? You can open different kinds of IRAs with a variety of organizations. 2012 tax amendment form You can open an IRA at a bank or other financial institution or with a mutual fund or life insurance company. 2012 tax amendment form You can also open an IRA through your stockbroker. 2012 tax amendment form Any IRA must meet Internal Revenue Code requirements. 2012 tax amendment form The requirements for the various arrangements are discussed below. 2012 tax amendment form Kinds of traditional IRAs. 2012 tax amendment form   Your traditional IRA can be an individual retirement account or annuity. 2012 tax amendment form It can be part of either a simplified employee pension (SEP) or an employer or employee association trust account. 2012 tax amendment form 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. 2012 tax amendment form The account is created by a written document. 2012 tax amendment form The document must show that the account meets all of the following requirements. 2012 tax amendment form 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. 2012 tax amendment form The trustee or custodian generally cannot accept contributions of more than the deductible amount for the year. 2012 tax amendment form However, rollover contributions and employer contributions to a simplified employee pension (SEP) can be more than this amount. 2012 tax amendment form Contributions, except for rollover contributions, must be in cash. 2012 tax amendment form See Rollovers , later. 2012 tax amendment form You must have a nonforfeitable right to the amount at all times. 2012 tax amendment form Money in your account cannot be used to buy a life insurance policy. 2012 tax amendment form Assets in your account cannot be combined with other property, except in a common trust fund or common investment fund. 2012 tax amendment form You must start receiving distributions by April 1 of the year following the year in which you reach age 70½. 2012 tax amendment form See When Must You Withdraw Assets? (Required Minimum Distributions) , later. 2012 tax amendment form Individual Retirement Annuity You can open an individual retirement annuity by purchasing an annuity contract or an endowment contract from a life insurance company. 2012 tax amendment form 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. 2012 tax amendment form An individual retirement annuity must meet all the following requirements. 2012 tax amendment form Your entire interest in the contract must be nonforfeitable. 2012 tax amendment form The contract must provide that you cannot transfer any portion of it to any person other than the issuer. 2012 tax amendment form There must be flexible premiums so that if your compensation changes, your payment can also change. 2012 tax amendment form This provision applies to contracts issued after November 6, 1978. 2012 tax amendment form 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. 2012 tax amendment form Distributions must begin by April 1 of the year following the year in which you reach age 70½. 2012 tax amendment form See When Must You Withdraw Assets? (Required Minimum Distributions) , later. 2012 tax amendment form Individual Retirement Bonds The sale of individual retirement bonds issued by the federal government was suspended after April 30, 1982. 2012 tax amendment form The bonds have the following features. 2012 tax amendment form They stop earning interest when you reach age 70½. 2012 tax amendment form If you die, interest will stop 5 years after your death, or on the date you would have reached age 70½, whichever is earlier. 2012 tax amendment form You cannot transfer the bonds. 2012 tax amendment form If you cash (redeem) the bonds before the year in which you reach age 59½, you may be subject to a 10% additional tax. 2012 tax amendment form See Age 59½ Rule under Early Distributions, later. 2012 tax amendment form You can roll over redemption proceeds into IRAs. 2012 tax amendment form 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. 2012 tax amendment form Generally, distributions from SEP IRAs are subject to the withdrawal and tax rules that apply to traditional IRAs. 2012 tax amendment form See Publication 560 for more information about SEPs. 2012 tax amendment form 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. 2012 tax amendment form The requirements for individual retirement accounts apply to these traditional IRAs. 2012 tax amendment form 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. 2012 tax amendment form 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. 2012 tax amendment form The disclosure statement must explain certain items in plain language. 2012 tax amendment form 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. 2012 tax amendment form This explanation must appear at the beginning of the disclosure statement. 2012 tax amendment form If you revoke your IRA within the revocation period, the sponsor must return to you the entire amount you paid. 2012 tax amendment form 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. 2012 tax amendment form These requirements apply to all sponsors. 2012 tax amendment form How Much Can Be Contributed? There are limits and other rules that affect the amount that can be contributed to a traditional IRA. 2012 tax amendment form These limits and rules are explained below. 2012 tax amendment form Community property laws. 2012 tax amendment form   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. 2012 tax amendment form This is the rule even in states with community property laws. 2012 tax amendment form Brokers' commissions. 2012 tax amendment form   Brokers' commissions paid in connection with your traditional IRA are subject to the contribution limit. 2012 tax amendment form For information about whether you can deduct brokers' commissions, see Brokers' commissions , later, under How Much Can You Deduct. 2012 tax amendment form Trustees' fees. 2012 tax amendment form   Trustees' administrative fees are not subject to the contribution limit. 2012 tax amendment form For information about whether you can deduct trustees' fees, see Trustees' fees , later, under How Much Can You Deduct. 2012 tax amendment form Qualified reservist repayments. 2012 tax amendment form   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. 2012 tax amendment form 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. 2012 tax amendment form 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. 2012 tax amendment form Limit. 2012 tax amendment form   Your qualified reservist repayments cannot be more than your qualified reservist distributions, explained under Early Distributions , later. 2012 tax amendment form When repayment contributions can be made. 2012 tax amendment form   You cannot make these repayment contributions later than the date that is 2 years after your active duty period ends. 2012 tax amendment form No deduction. 2012 tax amendment form   You cannot deduct qualified reservist repayments. 2012 tax amendment form Reserve component. 2012 tax amendment form   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. 2012 tax amendment form Figuring your IRA deduction. 2012 tax amendment form   The repayment of qualified reservist distributions does not affect the amount you can deduct as an IRA contribution. 2012 tax amendment form Reporting the repayment. 2012 tax amendment form   If you repay a qualified reservist distribution, include the amount of the repayment with nondeductible contributions on line 1 of Form 8606. 2012 tax amendment form Example. 2012 tax amendment form   In 2013, your IRA contribution limit is $5,500. 2012 tax amendment form However, because of your filing status and AGI, the limit on the amount you can deduct is $3,500. 2012 tax amendment form You can make a nondeductible contribution of $2,000 ($5,500 - $3,500). 2012 tax amendment form In an earlier year you received a $3,000 qualified reservist distribution, which you would like to repay this year. 2012 tax amendment form   For 2013, you can contribute a total of $8,500 to your IRA. 2012 tax amendment form 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. 2012 tax amendment form You contribute the maximum allowable for the year. 2012 tax amendment form 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. 2012 tax amendment form The qualified reservist repayment is not deductible. 2012 tax amendment form Contributions on your behalf to a traditional IRA reduce your limit for contributions to a Roth IRA. 2012 tax amendment form See chapter 2 for information about Roth IRAs. 2012 tax amendment form 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. 2012 tax amendment form Note. 2012 tax amendment form 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). 2012 tax amendment form 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. 2012 tax amendment form (See Nondeductible Contributions , later. 2012 tax amendment form ) Qualified reservist repayments do not affect this limit. 2012 tax amendment form Examples. 2012 tax amendment form George, who is 34 years old and single, earns $24,000 in 2013. 2012 tax amendment form His IRA contributions for 2013 are limited to $5,500. 2012 tax amendment form Danny, an unmarried college student working part time, earns $3,500 in 2013. 2012 tax amendment form His IRA contributions for 2013 are limited to $3,500, the amount of his compensation. 2012 tax amendment form More than one IRA. 2012 tax amendment form   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. 2012 tax amendment form Annuity or endowment contracts. 2012 tax amendment form   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. 2012 tax amendment form If more than this amount is contributed, the annuity or endowment contract is disqualified. 2012 tax amendment form 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. 2012 tax amendment form Your spouse's IRA contribution for the year to a traditional IRA. 2012 tax amendment form Any contributions for the year to a Roth IRA on behalf of your spouse. 2012 tax amendment form 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). 2012 tax amendment form Note. 2012 tax amendment form 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). 2012 tax amendment form Example. 2012 tax amendment form Kristin, a full-time student with no taxable compensation, marries Carl during the year. 2012 tax amendment form Neither of them was age 50 by the end of 2013. 2012 tax amendment form For the year, Carl has taxable compensation of $30,000. 2012 tax amendment form He plans to contribute (and deduct) $5,500 to a traditional IRA. 2012 tax amendment form If he and Kristin file a joint return, each can contribute $5,500 to a traditional IRA. 2012 tax amendment form 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. 2012 tax amendment form 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). 2012 tax amendment form 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. 2012 tax amendment form 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. 2012 tax amendment form See How Much Can You Deduct , later. 2012 tax amendment form Example. 2012 tax amendment form Tom and Darcy are married and both are 53. 2012 tax amendment form They both work and each has a traditional IRA. 2012 tax amendment form Tom earned $3,800 and Darcy earned $48,000 in 2013. 2012 tax amendment form 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. 2012 tax amendment form They can contribute up to $6,500 to Darcy's IRA. 2012 tax amendment form If they file separate returns, the amount that can be contributed to Tom's IRA is limited by his earned income, $3,800. 2012 tax amendment form 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. 2012 tax amendment form Example. 2012 tax amendment form Rafael, who is 40, earns $30,000 in 2013. 2012 tax amendment form Although he can contribute up to $5,500 for 2013, he contributes only $3,000. 2012 tax amendment form After April 15, 2014, Rafael cannot make up the difference between his actual contributions for 2013 ($3,000) and his 2013 limit ($5,500). 2012 tax amendment form He cannot contribute $2,500 more than the limit for any later year. 2012 tax amendment form 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. 2012 tax amendment form However, a penalty or additional tax may apply. 2012 tax amendment form See Excess Contributions , later, under What Acts Result in Penalties or Additional Taxes. 2012 tax amendment form 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). 2012 tax amendment form Contributions must be in the form of money (cash, check, or money order). 2012 tax amendment form Property cannot be contributed. 2012 tax amendment form Although property cannot be contributed, your IRA may invest in certain property. 2012 tax amendment form For example, your IRA may purchase shares of stock. 2012 tax amendment form For other restrictions on the use of funds in your IRA, see Prohibited Transactions , later in this chapter. 2012 tax amendment form You may be able to transfer or roll over certain property from one retirement plan to another. 2012 tax amendment form See the discussion of rollovers and other transfers later in this chapter under Can You Move Retirement Plan Assets . 2012 tax amendment form 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. 2012 tax amendment form For details, see the instructions for your income tax return or Form 8888, Allocation of Refund (Including Savings Bond Purchases). 2012 tax amendment form Contributions can be made to your traditional IRA for each year that you receive compensation and have not reached age 70½. 2012 tax amendment form 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. 2012 tax amendment form See Who Can Open a Traditional IRA , earlier. 2012 tax amendment form 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. 2012 tax amendment form Contributions can resume for any years that you qualify. 2012 tax amendment form Contributions must be made by due date. 2012 tax amendment form   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. 2012 tax amendment form 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. 2012 tax amendment form Age 70½ rule. 2012 tax amendment form   Contributions cannot be made to your traditional IRA for the year in which you reach age 70½ or for any later year. 2012 tax amendment form   You attain age 70½ on the date that is 6 calendar months after the 70th anniversary of your birth. 2012 tax amendment form If you were born on or before June 30, 1943, you cannot contribute for 2013 or any later year. 2012 tax amendment form Designating year for which contribution is made. 2012 tax amendment form   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. 2012 tax amendment form 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). 2012 tax amendment form Filing before a contribution is made. 2012 tax amendment form    You can file your return claiming a traditional IRA contribution before the contribution is actually made. 2012 tax amendment form Generally, the contribution must be made by the due date of your return, not including extensions. 2012 tax amendment form Contributions not required. 2012 tax amendment form   You do not have to contribute to your traditional IRA for every tax year, even if you can. 2012 tax amendment form 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 . 2012 tax amendment form However, if you or your spouse was covered by an employer retirement plan, you may not be able to deduct this amount. 2012 tax amendment form See Limit if Covered by Employer Plan , later. 2012 tax amendment form You may be able to claim a credit for contributions to your traditional IRA. 2012 tax amendment form For more information, see chapter 4. 2012 tax amendment form Trustees' fees. 2012 tax amendment form   Trustees' administrative fees that are billed separately and paid in connection with your traditional IRA are not deductible as IRA contributions. 2012 tax amendment form However, they may be deductible as a miscellaneous itemized deduction on Schedule A (Form 1040). 2012 tax amendment form For information about miscellaneous itemized deductions, see Publication 529, Miscellaneous Deductions. 2012 tax amendment form Brokers' commissions. 2012 tax amendment form   These commissions are part of your IRA contribution and, as such, are deductible subject to the limits. 2012 tax amendment form Full deduction. 2012 tax amendment form   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. 2012 tax amendment form   This limit is reduced by any contributions made to a 501(c)(18) plan on your behalf. 2012 tax amendment form Kay Bailey Hutchison Spousal IRA. 2012 tax amendment form   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. 2012 tax amendment form The IRA deduction for the year of the spouse with the greater compensation. 2012 tax amendment form Any designated nondeductible contribution for the year made on behalf of the spouse with the greater compensation. 2012 tax amendment form Any contributions for the year to a Roth IRA on behalf of the spouse with the greater compensation. 2012 tax amendment form   This limit is reduced by any contributions to a section 501(c)(18) plan on behalf of the spouse with the lesser compensation. 2012 tax amendment form Note. 2012 tax amendment form 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. 2012 tax amendment form After a divorce or legal separation, you can deduct only the contributions to your own IRA. 2012 tax amendment form Your deductions are subject to the rules for single individuals. 2012 tax amendment form Covered by an employer retirement plan. 2012 tax amendment form   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. 2012 tax amendment form This is discussed later under Limit if Covered by Employer Plan . 2012 tax amendment form Limits on the amount you can deduct do not affect the amount that can be contributed. 2012 tax amendment form 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. 2012 tax amendment form The “Retirement Plan” box should be checked if you were covered. 2012 tax amendment form Reservists and volunteer firefighters should also see Situations in Which You Are Not Covered , later. 2012 tax amendment form If you are not certain whether you were covered by your employer's retirement plan, you should ask your employer. 2012 tax amendment form Federal judges. 2012 tax amendment form   For purposes of the IRA deduction, federal judges are covered by an employer plan. 2012 tax amendment form For Which Year(s) Are You Covered? Special rules apply to determine the tax years for which you are covered by an employer plan. 2012 tax amendment form These rules differ depending on whether the plan is a defined contribution plan or a defined benefit plan. 2012 tax amendment form Tax year. 2012 tax amendment form   Your tax year is the annual accounting period you use to keep records and report income and expenses on your income tax return. 2012 tax amendment form For almost all people, the tax year is the calendar year. 2012 tax amendment form Defined contribution plan. 2012 tax amendment form   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. 2012 tax amendment form However, also see Situations in Which You Are Not Covered , later. 2012 tax amendment form   A defined contribution plan is a plan that provides for a separate account for each person covered by the plan. 2012 tax amendment form In a defined contribution plan, the amount to be contributed to each participant's account is spelled out in the plan. 2012 tax amendment form 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. 2012 tax amendment form Types of defined contribution plans include profit-sharing plans, stock bonus plans, and money purchase pension plans. 2012 tax amendment form Example. 2012 tax amendment form Company A has a money purchase pension plan. 2012 tax amendment form Its plan year is from July 1 to June 30. 2012 tax amendment form The plan provides that contributions must be allocated as of June 30. 2012 tax amendment form Bob, an employee, leaves Company A on December 31, 2012. 2012 tax amendment form The contribution for the plan year ending on June 30, 2013, is made February 15, 2014. 2012 tax amendment form Because an amount is contributed to Bob's account for the plan year, Bob is covered by the plan for his 2013 tax year. 2012 tax amendment form   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. 2012 tax amendment form 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. 2012 tax amendment form 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. 2012 tax amendment form Example. 2012 tax amendment form Mickey was covered by a profit-sharing plan and left the company on December 31, 2012. 2012 tax amendment form The plan year runs from July 1 to June 30. 2012 tax amendment form 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. 2012 tax amendment form 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. 2012 tax amendment form 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. 2012 tax amendment form 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. 2012 tax amendment form On December 31, 2013, the company decided to contribute to the plan for the plan year ending June 30, 2013. 2012 tax amendment form That contribution was made on February 15, 2014. 2012 tax amendment form Mickey is an active participant in the plan for his 2014 tax year but not for his 2013 tax year. 2012 tax amendment form No vested interest. 2012 tax amendment form   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. 2012 tax amendment form Defined benefit plan. 2012 tax amendment form   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. 2012 tax amendment form 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. 2012 tax amendment form   A defined benefit plan is any plan that is not a defined contribution plan. 2012 tax amendment form In a defined benefit plan, the level of benefits to be provided to each participant is spelled out in the plan. 2012 tax amendment form The plan administrator figures the amount needed to provide those benefits and those amounts are contributed to the plan. 2012 tax amendment form Defined benefit plans include pension plans and annuity plans. 2012 tax amendment form Example. 2012 tax amendment form 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. 2012 tax amendment form Nick leaves Company B on December 31, 2012. 2012 tax amendment form 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. 2012 tax amendment form No vested interest. 2012 tax amendment form   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. 2012 tax amendment form 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. 2012 tax amendment form Social security or railroad retirement. 2012 tax amendment form   Coverage under social security or railroad retirement is not coverage under an employer retirement plan. 2012 tax amendment form Benefits from previous employer's plan. 2012 tax amendment form   If you receive retirement benefits from a previous employer's plan, you are not covered by that plan. 2012 tax amendment form Reservists. 2012 tax amendment form   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. 2012 tax amendment form You are not covered by the plan if both of the following conditions are met. 2012 tax amendment form 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. 2012 tax amendment form You did not serve more than 90 days on active duty during the year (not counting duty for training). 2012 tax amendment form Volunteer firefighters. 2012 tax amendment form   If the only reason you participate in a plan is because you are a volunteer firefighter, you may not be covered by the plan. 2012 tax amendment form You are not covered by the plan if both of the following conditions are met. 2012 tax amendment form 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. 2012 tax amendment form Your accrued retirement benefits at the beginning of the year will not provide more than $1,800 per year at retirement. 2012 tax amendment form 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. 2012 tax amendment form Your deduction is also affected by how much income you had and by your filing status. 2012 tax amendment form Your deduction may also be affected by social security benefits you received. 2012 tax amendment form Reduced or no deduction. 2012 tax amendment form   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. 2012 tax amendment form   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. 2012 tax amendment form These amounts vary depending on your filing status. 2012 tax amendment form   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 . 2012 tax amendment form 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. 2012 tax amendment form 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. 2012 tax amendment form You received social security benefits. 2012 tax amendment form You received taxable compensation. 2012 tax amendment form Contributions were made to your traditional IRA. 2012 tax amendment form You or your spouse was covered by an employer retirement plan. 2012 tax amendment form 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. 2012 tax amendment form Appendix B includes an example with filled-in worksheets to assist you. 2012 tax amendment form Table 1-2. 2012 tax amendment form 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. 2012 tax amendment form IF your filing status is . 2012 tax amendment form . 2012 tax amendment form . 2012 tax amendment form AND your modified adjusted gross income (modified AGI) is . 2012 tax amendment form . 2012 tax amendment form . 2012 tax amendment form THEN you can take . 2012 tax amendment form . 2012 tax amendment form . 2012 tax amendment form single or head of household $59,000 or less a full deduction. 2012 tax amendment form more than $59,000 but less than $69,000 a partial deduction. 2012 tax amendment form $69,000 or more no deduction. 2012 tax amendment form married filing jointly or  qualifying widow(er) $95,000 or less a full deduction. 2012 tax amendment form more than $95,000 but less than $115,000 a partial deduction. 2012 tax amendment form $115,000 or more no deduction. 2012 tax amendment form married filing separately2 less than $10,000 a partial deduction. 2012 tax amendment form $10,000 or more no deduction. 2012 tax amendment form 1 Modified AGI (adjusted gross income). 2012 tax amendment form See Modified adjusted gross income (AGI) , later. 2012 tax amendment form  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). 2012 tax amendment form Table 1-3. 2012 tax amendment form 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. 2012 tax amendment form IF your filing status is . 2012 tax amendment form . 2012 tax amendment form . 2012 tax amendment form AND your modified adjusted gross income (modified AGI) is . 2012 tax amendment form . 2012 tax amendment form . 2012 tax amendment form THEN you can take . 2012 tax amendment form . 2012 tax amendment form . 2012 tax amendment form single, head of household, or qualifying widow(er) any amount a full deduction. 2012 tax amendment form married filing jointly or separately with a spouse who is not covered by a plan at work any amount a full deduction. 2012 tax amendment form married filing jointly with a spouse who is covered by a plan at work $178,000 or less a full deduction. 2012 tax amendment form more than $178,000 but less than $188,000 a partial deduction. 2012 tax amendment form $188,000 or more no deduction. 2012 tax amendment form married filing separately with a spouse who is covered by a plan at work2 less than $10,000 a partial deduction. 2012 tax amendment form $10,000 or more no deduction. 2012 tax amendment form 1 Modified AGI (adjusted gross income). 2012 tax amendment form See Modified adjusted gross income (AGI) , later. 2012 tax amendment form  2 You are entitled to the full deduction if you did not live with your spouse at any time during the year. 2012 tax amendment form 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. 2012 tax amendment form If your AGI is $191,000 or more, you cannot take a deduction for a contribution to a traditional IRA. 2012 tax amendment form 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. 2012 tax amendment form Covered by a retirement plan. 2012 tax amendment form   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. 2012 tax amendment form 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. 2012 tax amendment form If your spouse is covered. 2012 tax amendment form   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. 2012 tax amendment form Filing status. 2012 tax amendment form   Your filing status depends primarily on your marital status. 2012 tax amendment form 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. 2012 tax amendment form If you need more information on filing status, see Publication 501, Exemptions, Standard Deduction, and Filing Information. 2012 tax amendment form Lived apart from spouse. 2012 tax amendment form   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. 2012 tax amendment form Modified adjusted gross income (AGI). 2012 tax amendment form   You can use Worksheet 1-1 to figure your modified AGI. 2012 tax amendment form 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. 2012 tax amendment form    Do not assume that your modified AGI is the same as your compensation. 2012 tax amendment form Your modified AGI may include income in addition to your compensation (discussed earlier) such as interest, dividends, and income from IRA distributions. 2012 tax amendment form Form 1040. 2012 tax amendment form   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. 2012 tax amendment form IRA deduction. 2012 tax amendment form Student loan interest deduction. 2012 tax amendment form Tuition and fees deduction. 2012 tax amendment form Domestic production activities deduction. 2012 tax amendment form Foreign earned income exclusion. 2012 tax amendment form Foreign housing exclusion or deduction. 2012 tax amendment form Exclusion of qualified savings bond interest shown on Form 8815. 2012 tax amendment form Exclusion of employer-provided adoption benefits shown on Form 8839. 2012 tax amendment form This is your modified AGI. 2012 tax amendment form Form 1040A. 2012 tax amendment form   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. 2012 tax amendment form IRA deduction. 2012 tax amendment form Student loan interest deduction. 2012 tax amendment form Tuition and fees deduction. 2012 tax amendment form Exclusion of qualified savings bond interest shown on Form 8815. 2012 tax amendment form This is your modified AGI. 2012 tax amendment form Form 1040NR. 2012 tax amendment form   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. 2012 tax amendment form IRA deduction. 2012 tax amendment form Student loan interest deduction. 2012 tax amendment form Domestic production activities deduction. 2012 tax amendment form Exclusion of qualified savings bond interest shown on Form 8815. 2012 tax amendment form Exclusion of employer-provided adoption benefits shown on Form 8839. 2012 tax amendment form This is your modified AGI. 2012 tax amendment form Income from IRA distributions. 2012 tax amendment form   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. 2012 tax amendment form Both contributions for 2013 and distributions in 2013. 2012 tax amendment form   If all three of the following apply, any IRA distributions you received in 2013 may be partly tax free and partly taxable. 2012 tax amendment form 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. 2012 tax amendment form (See Nondeductible Contributions and Worksheet 1-2, later. 2012 tax amendment form ) If this is your situation, you must figure the taxable part of the traditional IRA distribution before you can figure your modified AGI. 2012 tax amendment form To do this, you can use Worksheet 1-5, later. 2012 tax amendment form   If at least one of the above does not apply, figure your modified AGI using Worksheet 1-1, later. 2012 tax amendment form 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. 2012 tax amendment form Figuring Your Reduced IRA Deduction for 2013. 2012 tax amendment form The Instructions for Form 1040, Form 1040A, and Form 1040NR include similar worksheets that you can use instead of the worksheet in this publication. 2012 tax amendment form If you or your spouse is covered by an employer retirement plan, and you received any social security benefits, see Social Security Recipients , earlier. 2012 tax amendment form Note. 2012 tax amendment form If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. 2012 tax amendment form Worksheet 1-1. 2012 tax amendment form Figuring Your Modified AGI Use this worksheet to figure your modified AGI for traditional IRA purposes. 2012 tax amendment form 1. 2012 tax amendment form 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. 2012 tax amendment form   2. 2012 tax amendment form Enter any student loan interest deduction from Form 1040, line 33; Form 1040A, line 18; or Form 1040NR, line 33 2. 2012 tax amendment form   3. 2012 tax amendment form Enter any tuition and fees deduction from Form 1040, line 34, or Form 1040A, line 19 3. 2012 tax amendment form   4. 2012 tax amendment form Enter any domestic production activities deduction from Form 1040, line 35, or Form 1040NR, line 34 4. 2012 tax amendment form   5. 2012 tax amendment form Enter any foreign earned income exclusion and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18 5. 2012 tax amendment form   6. 2012 tax amendment form Enter any foreign housing deduction from Form 2555, line 50 6. 2012 tax amendment form   7. 2012 tax amendment form Enter any excludable savings bond interest from Form 8815, line 14 7. 2012 tax amendment form   8. 2012 tax amendment form Enter any excluded employer-provided adoption benefits from Form 8839, line 28 8. 2012 tax amendment form   9. 2012 tax amendment form Add lines 1 through 8. 2012 tax amendment form This is your Modified AGI for traditional IRA purposes 9. 2012 tax amendment form   Reporting Deductible Contributions If you file Form 1040, enter your IRA deduction on line 32 of that form. 2012 tax amendment form If you file Form 1040A, enter your IRA deduction on line 17 of that form. 2012 tax amendment form If you file Form 1040NR, enter your IRA deduction on line 32 of that form. 2012 tax amendment form You cannot deduct IRA contributions on Form 1040EZ or Form 1040NR-EZ. 2012 tax amendment form Self-employed. 2012 tax amendment form   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. 2012 tax amendment form If you file Form 1040NR, enter your deduction on line 28 of that form. 2012 tax amendment form 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. 2012 tax amendment form The difference between your total permitted contributions and your IRA deduction, if any, is your nondeductible contribution. 2012 tax amendment form Example. 2012 tax amendment form Tony is 29 years old and single. 2012 tax amendment form In 2013, he was covered by a retirement plan at work. 2012 tax amendment form His salary is $62,000. 2012 tax amendment form His modified AGI is $70,000. 2012 tax amendment form Tony makes a $5,500 IRA contribution for 2013. 2012 tax amendment form Because he was covered by a retirement plan and his modified AGI is above $69,000, he cannot deduct his $5,500 IRA contribution. 2012 tax amendment form He must designate this contribution as a nondeductible contribution by reporting it on Form 8606. 2012 tax amendment form Repayment of reservist distributions. 2012 tax amendment form   Nondeductible contributions may include repayments of qualified reservist distributions. 2012 tax amendment form For more information, see Qualified reservist repayments under How Much Can Be Contributed, earlier. 2012 tax amendment form Form 8606. 2012 tax amendment form   To designate contributions as nondeductible, you must file Form 8606. 2012 tax amendment form (See the filled-in Forms 8606 in this chapter. 2012 tax amendment form )   You do not have to designate a contribution as nondeductible until you file your tax return. 2012 tax amendment form When you file, you can even designate otherwise deductible contributions as nondeductible contributions. 2012 tax amendment form   You must file Form 8606 to report nondeductible contributions even if you do not have to file a tax return for the year. 2012 tax amendment form    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. 2012 tax amendment form In those situations, a Form 8606 is completed for the year you take a distribution from that IRA. 2012 tax amendment form See Form 8606 under Distributions Fully or Partly Taxable, later. 2012 tax amendment form Failure to report nondeductible contributions. 2012 tax amendment form   If you do not report nondeductible contributions, all of the contributions to your traditional IRA will be treated like deductible contributions when withdrawn. 2012 tax amendment form All distributions from your IRA will be taxed unless you can show, with satisfactory evidence, that nondeductible contributions were made. 2012 tax amendment form Penalty for overstatement. 2012 tax amendment form   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. 2012 tax amendment form Penalty for failure to file Form 8606. 2012 tax amendment form   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. 2012 tax amendment form Tax on earnings on nondeductible contributions. 2012 tax amendment form   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. 2012 tax amendment form Cost basis. 2012 tax amendment form   You will have a cost basis in your traditional IRA if you made any nondeductible contributions. 2012 tax amendment form Your cost basis is the sum of the nondeductible contributions to your IRA minus any withdrawals or distributions of nondeductible contributions. 2012 tax amendment form    Commonly, distributions from your traditional IRAs will include both taxable and nontaxable (cost basis) amounts. 2012 tax amendment form See Are Distributions Taxable, later, for more information. 2012 tax amendment form Recordkeeping. 2012 tax amendment form There is a recordkeeping worksheet, Appendix A. 2012 tax amendment form Summary Record of Traditional IRA(s) for 2013 , that you can use to keep a record of deductible and nondeductible IRA contributions. 2012 tax amendment form 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. 2012 tax amendment form Example 1. 2012 tax amendment form For 2013, Tom and Betty file a joint return on Form 1040. 2012 tax amendment form They are both 39 years old. 2012 tax amendment form They are both employed and Tom is covered by his employer's retirement plan. 2012 tax amendment form Tom's salary is $59,000 and Betty's is $32,555. 2012 tax amendment form They each have a traditional IRA and their combined modified AGI, which includes $5,000 interest and dividend income, is $96,555. 2012 tax amendment form 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 . 2012 tax amendment form For 2013, Tom contributed $5,500 to his IRA and Betty contributed $5,500 to hers. 2012 tax amendment form Even though they file a joint return, they must use separate worksheets to figure the IRA deduction for each of them. 2012 tax amendment form Tom can take a deduction of only $5,080. 2012 tax amendment form He can choose to treat the $5,080 as either deductible or nondeductible contributions. 2012 tax amendment form He can either leave the $420 ($5,500 − $5,080) of nondeductible contributions in his IRA or withdraw them by April 15, 2014. 2012 tax amendment form He decides to treat the $5,080 as deductible contributions and leave the $420 of nondeductible contributions in his IRA. 2012 tax amendment form Using Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, Tom figures his deductible and nondeductible amounts as shown on Worksheet 1-2. 2012 tax amendment form Figuring Your Reduced IRA Deduction for 2013—Example 1 Illustrated. 2012 tax amendment form Betty figures her IRA deduction as follows. 2012 tax amendment form Betty can treat all or part of her contributions as either deductible or nondeductible. 2012 tax amendment form 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 . 2012 tax amendment form 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. 2012 tax amendment form Betty decides to treat her $5,500 IRA contributions as deductible. 2012 tax amendment form The IRA deductions of $5,080 and $5,500 on the joint return for Tom and Betty total $10,580. 2012 tax amendment form Example 2. 2012 tax amendment form For 2013, Ed and Sue file a joint return on Form 1040. 2012 tax amendment form They are both 39 years old. 2012 tax amendment form Ed is covered by his employer's retirement plan. 2012 tax amendment form Ed's salary is $45,000. 2012 tax amendment form Sue had no compensation for the year and did not contribute to an IRA. 2012 tax amendment form Sue is not covered by an employer plan. 2012 tax amendment form Ed contributed $5,500 to his traditional IRA and $5,500 to a traditional IRA for Sue (a Kay Bailey Hutchison Spousal IRA). 2012 tax amendment form 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. 2012 tax amendment form Because the combined modified AGI is $115,000 or more, Ed cannot deduct any of the contribution to his traditional IRA. 2012 tax amendment form He can either leave the $5,500 of nondeductible contributions in his IRA or withdraw them by April 15, 2014. 2012 tax amendment form Sue figures her IRA deduction as shown on Worksheet 1-2. 2012 tax amendment form Figuring Your Reduced IRA Deduction for 2013—Example 2 Illustrated. 2012 tax amendment form Worksheet 1-2. 2012 tax amendment form 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. 2012 tax amendment form ) Note. 2012 tax amendment form If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. 2012 tax amendment form IF you . 2012 tax amendment form . 2012 tax amendment form . 2012 tax amendment form AND your  filing status is . 2012 tax amendment form . 2012 tax amendment form . 2012 tax amendment form AND your modified AGI is over . 2012 tax amendment form . 2012 tax amendment form . 2012 tax amendment form THEN enter on  line 1 below . 2012 tax amendment form . 2012 tax amendment form . 2012 tax amendment form       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. 2012 tax amendment form Enter applicable amount from table above 1. 2012 tax amendment form   2. 2012 tax amendment form Enter your modified AGI (that of both spouses, if married filing jointly) 2. 2012 tax amendment form     Note. 2012 tax amendment form If line 2 is equal to or more than the amount on line 1, stop here. 2012 tax amendment form  Your IRA contributions are not deductible. 2012 tax amendment form See Nondeductible Contributions , earlier. 2012 tax amendment form     3. 2012 tax amendment form Subtract line 2 from line 1. 2012 tax amendment form 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. 2012 tax amendment form 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. 2012 tax amendment form   4. 2012 tax amendment form Multiply line 3 by the percentage below that applies to you. 2012 tax amendment form If the result is not a multiple of $10, round it to the next highest multiple of $10. 2012 tax amendment form (For example, $611. 2012 tax amendment form 40 is rounded to $620. 2012 tax amendment form ) However, if the result is less than $200, enter $200. 2012 tax amendment form         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. 2012 tax amendment form 5% (. 2012 tax amendment form 275) (by 32. 2012 tax amendment form 5% (. 2012 tax amendment form 325) if you are age 50 or older). 2012 tax amendment form All others, multiply line 3 by 55% (. 2012 tax amendment form 55) (by 65% (. 2012 tax amendment form 65) if you are age 50 or older). 2012 tax amendment form 4. 2012 tax amendment form   5. 2012 tax amendment form 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). 2012 tax amendment form 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. 2012 tax amendment form If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. 2012 tax amendment form   6. 2012 tax amendment form 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). 2012 tax amendment form If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. 2012 tax amendment form 6. 2012 tax amendment form   7. 2012 tax amendment form IRA deduction. 2012 tax amendment form Compare lines 4, 5, and 6. 2012 tax amendment form 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. 2012 tax amendment form If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. 2012 tax amendment form   8. 2012 tax amendment form Nondeductible contribution. 2012 tax amendment form Subtract line 7 from line 5 or 6, whichever is smaller. 2012 tax amendment form  Enter the result here and on line 1 of your Form 8606 8. 2012 tax amendment form   Worksheet 1-2. 2012 tax amendment form 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. 2012 tax amendment form ) Note. 2012 tax amendment form If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. 2012 tax amendment form IF you . 2012 tax amendment form . 2012 tax amendment form . 2012 tax amendment form AND your  filing status is . 2012 tax amendment form . 2012 tax amendment form . 2012 tax amendment form AND your modified AGI is over . 2012 tax amendment form . 2012 tax amendment form . 2012 tax amendment form THEN enter on  line 1 below . 2012 tax amendment form . 2012 tax amendment form . 2012 tax amendment form       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. 2012 tax amendment form Enter applicable amount from table above 1. 2012 tax amendment form 115,000 2. 2012 tax amendment form Enter your modified AGI (that of both spouses, if married filing jointly) 2. 2012 tax amendment form 96,555   Note. 2012 tax amendment form If line 2 is equal to or more than the amount on line 1, stop here. 2012 tax amendment form  Your IRA contributions are not deductible. 2012 tax amendment form See Nondeductible Contributions , earlier. 2012 tax amendment form     3. 2012 tax amendment form Subtract line 2 from line 1. 2012 tax amendment form 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. 2012 tax amendment form 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. 2012 tax amendment form 18,445 4. 2012 tax amendment form Multiply line 3 by the percentage below that applies to you. 2012 tax amendment form If the result is not a multiple of $10, round it to the next highest multiple of $10. 2012 tax amendment form (For example, $611. 2012 tax amendment form 40 is rounded to $620. 2012 tax amendment form ) However, if the result is less than $200, enter $200. 2012 tax amendment form         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. 2012 tax amendment form 5% (. 2012 tax amendment form 275) (by 32. 2012 tax amendment form 5% (. 2012 tax amendment form 325) if you are age 50 or older). 2012 tax amendment form All others, multiply line 3 by 55% (. 2012 tax amendment form 55) (by 65% (. 2012 tax amendment form 65) if you are age 50 or older). 2012 tax amendment form 4. 2012 tax amendment form 5,080 5. 2012 tax amendment form 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). 2012 tax amendment form 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. 2012 tax amendment form If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. 2012 tax amendment form 59,000 6. 2012 tax amendment form 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). 2012 tax amendment form If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. 2012 tax amendment form 6. 2012 tax amendment form 5,500 7. 2012 tax amendment form IRA deduction. 2012 tax amendment form Compare lines 4, 5, and 6. 2012 tax amendment form 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. 2012 tax amendment form If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. 2012 tax amendment form 5,080 8. 2012 tax amendment form Nondeductible contribution. 2012 tax amendment form Subtract line 7 from line 5 or 6, whichever is smaller. 2012 tax amendment form  Enter the result here and on line 1 of your Form 8606 8. 2012 tax amendment form 420 Worksheet 1-2. 2012 tax amendment form 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. 2012 tax amendment form ) Note. 2012 tax amendment form If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. 2012 tax amendment form IF you . 2012 tax amendment form . 2012 tax amendment form . 2012 tax amendment form AND your  filing status is . 2012 tax amendment form . 2012 tax amendment form . 2012 tax amendment form AND your modified AGI is over . 2012 tax amendment form . 2012 tax amendment form . 2012 tax amendment form THEN enter on  line 1 below . 2012 tax amendment form . 2012 tax amendment form . 2012 tax amendment form       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. 2012 tax amendment form Enter applicable amount from table above 1. 2012 tax amendment form 188,000 2. 2012 tax amendment form Enter your modified AGI (that of both spouses, if married filing jointly) 2. 2012 tax amendment form 180,555   Note. 2012 tax amendment form If line 2 is equal to or more than the amount on line 1, stop here. 2012 tax amendment form  Your IRA contributions are not deductible. 2012 tax amendment form See Nondeductible Contributions , earlier. 2012 tax amendment form     3. 2012 tax amendment form Subtract line 2 from line 1. 2012 tax amendment form 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. 2012 tax amendment form 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. 2012 tax amendment form 7,445 4. 2012 tax amendment form Multiply line 3 by the percentage below that applies to you. 2012 tax amendment form If the result is not a multiple of $10, round it to the next highest multiple of $10. 2012 tax amendment form (For example, $611. 2012 tax amendment form 40 is rounded to $620. 2012 tax amendment form ) However, if the result is less than $200, enter $200. 2012 tax amendment form         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. 2012 tax amendment form 5% (. 2012 tax amendment form 275) (by 32. 2012 tax amendment form 5% (. 2012 tax amendment form 325) if you are age 50 or older). 2012 tax amendment form All others, multiply line 3 by 55% (. 2012 tax amendment form 55) (by 65% (. 2012 tax amendment form 65) if you are age 50 or older). 2012 tax amendment form 4. 2012 tax amendment form 4,100 5. 2012 tax amendment form 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). 2012 tax amendment form 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. 2012 tax amendment form If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. 2012 tax amendment form 39,500 6. 2012 tax amendment form 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). 2012 tax amendment form If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. 2012 tax amendment form 6. 2012 tax amendment form 5,500 7. 2012 tax amendment form IRA deduction. 2012 tax amendment form Compare lines 4, 5, and 6. 2012 tax amendment form 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. 2012 tax amendment form If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. 2012 tax amendment form 4,100 8. 2012 tax amendment form Nondeductible contribution. 2012 tax amendment form Subtract line 7 from line 5 or 6, whichever is smaller. 2012 tax amendment form  Enter the result here and on line 1 of your Form 8606 8. 2012 tax amendment form 1,400 What if You Inherit an IRA? If you inherit a traditional IRA, you are called a beneficiary. 2012 tax amendment form A beneficiary can be any person or entity the owner chooses to receive the benefits of the IRA after he or she dies. 2012 tax amendment form Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive. 2012 tax amendment form Inherited from spouse. 2012 tax amendment form   If you inherit a traditional IRA from your spouse, you generally have the following three choices. 2012 tax amendment form You can: Treat it as your own IRA by designating yourself as the account owner. 2012 tax amendment form 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