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Federal Taxes 2012

Military Turbo TaxFile Tax AmendmentFreetaxreturnsTaxact 2006 Free DownloadHow To File Tax Extension Electronically1042nr EzLast Day File Taxes 2012File Back Tax OnlineWhat Is A 1040nr1040 Ez Tax FormTurbo Tax Ez 1040 FreeState Tax HelpIrs Forms For 2012E File 2012 Taxes FreeH&r Block Free EditionFree 1040ez H&r Block1040 Ez Tax Form 2012Filing A Tax Amendment Online1040ez 2011Federal Income Tax TableFiling Income Tax For 20121040ez CalculatorHow To Amend My TaxesFree 1040ez2012 Schedule A Tax FormTurbotax Military FreeFree Tax Filing For State And Federal1040ez2013 FormE File Tax ReturnsCan I File My Back Taxes Online FreeEz 40 Tax FormE File 2011 Tax ReturnFree File2012 Irs Form 1040File Ez 1040 Free2008 Tax Form 1040Amendment Tax Return 2012Taxact 2012 Login InIrs Ez Form 20112011 Tax Forms 1040a

Federal Taxes 2012

Federal taxes 2012 Index A Adjusted gross income (AGI) Income limits for, Income Limits Age Age 65, Age 65. Federal taxes 2012 Mandatory retirement age, Payments that are not disability income. Federal taxes 2012 Assistance (see Tax help) C Citizenship requirement, U. Federal taxes 2012 S. Federal taxes 2012 Citizen or Resident Alien Credit figured by IRS, Credit Figured for You Credit figured for you, Credit Figured for You D Disability benefits Nontaxable by law, Step 2. Federal taxes 2012 Total Certain Nontaxable Pensions and Benefits Disability income, Disability income. Federal taxes 2012 Disability, permanent and total disability, Qualified Individual, Permanent and total disability. Federal taxes 2012 E Eligibility for credit, Are You Eligible for the Credit? Employer's accident or health plans or pension plans Disability income from, Disability income. Federal taxes 2012 Excess adjusted gross income, Step 3. Federal taxes 2012 Determine Excess Adjusted Gross Income F Figuring the credit yourself, Figuring the Credit Yourself Determine excess AGI, Step 3. Federal taxes 2012 Determine Excess Adjusted Gross Income Determine initial amount, Step 1. Federal taxes 2012 Determine Initial Amount Determine the credit, Step 5. Federal taxes 2012 Determine Your Credit Determine the total of steps 2 and 3, Step 4. Federal taxes 2012 Determine the Total of Steps 2 and 3 Total certain nontaxable pensions and benefits, Step 2. Federal taxes 2012 Total Certain Nontaxable Pensions and Benefits Foreign military service Pension, annuity, or disability benefit from, Step 2. Federal taxes 2012 Total Certain Nontaxable Pensions and Benefits Foreign Service Pension, annuity, or disability benefit from, Step 2. Federal taxes 2012 Total Certain Nontaxable Pensions and Benefits Form RRB-1099 Payments by Railroad Retirement Board, Step 2. Federal taxes 2012 Total Certain Nontaxable Pensions and Benefits Form SSA-1099 Social security benefit statement, Step 2. Federal taxes 2012 Total Certain Nontaxable Pensions and Benefits Free tax services, Free help with your tax return. Federal taxes 2012 H Head of household, Head of household. Federal taxes 2012 Help (see Tax help) I Income limits, Income Limits Initial amounts for persons under age 65, Initial amounts for persons under age 65. Federal taxes 2012 J Joint returns, Married Persons L Limit on credit, Limit on credit. Federal taxes 2012 Lump-sum payments Accrued annual leave, Payments that are not disability income. Federal taxes 2012 Death benefits paid to surviving spouse or child, Step 2. Federal taxes 2012 Total Certain Nontaxable Pensions and Benefits M Mandatory retirement age, Payments that are not disability income. Federal taxes 2012 Married taxpayers, Married Persons Mentally incompetent persons Sheltered employment for, Sheltered employment. Federal taxes 2012 Missing children Photographs of, Reminders N National Oceanic and Atmospheric Administration Pension, annuity, or disability benefit from, Step 2. Federal taxes 2012 Total Certain Nontaxable Pensions and Benefits Nonresident aliens, Exceptions. Federal taxes 2012 Nontaxable payments, Step 2. Federal taxes 2012 Total Certain Nontaxable Pensions and Benefits O Out of work, Substantial gainful activity. Federal taxes 2012 P Pension or annuity payments Nontaxable by law, Step 2. Federal taxes 2012 Total Certain Nontaxable Pensions and Benefits Permanent and total disability, Qualified Individual, Permanent and total disability. Federal taxes 2012 Physician certification, Permanent and total disability. Federal taxes 2012 , Physician's statement. Federal taxes 2012 Public Health Service Pension, annuity, or disability benefit from, Step 2. Federal taxes 2012 Total Certain Nontaxable Pensions and Benefits Publications (see Tax help) Q Qualified individual, Qualified Individual Age 65 or older, Qualified Individual Under age 65 and retired on permanent and total disability, Qualified Individual, Under Age 65 R Residence requirement, U. Federal taxes 2012 S. Federal taxes 2012 Citizen or Resident Alien S Schedule R, Credit Figured for You, Figuring the Credit Yourself, , Examples Sheltered employment, Sheltered employment. Federal taxes 2012 Social security payments, Step 2. Federal taxes 2012 Total Certain Nontaxable Pensions and Benefits Substantial gainful activity, Substantial gainful activity. Federal taxes 2012 T Tables and figures Figure A, Qualified individual determination, Substantial gainful activity. Federal taxes 2012 Table 1, Income limits, Substantial gainful activity. Federal taxes 2012 , Table 1. Federal taxes 2012 Income Limits Table 2, Initial amounts, Table 2. Federal taxes 2012 Initial Amounts Tax help, How To Get Tax Help TTY/TDD information, How To Get Tax Help U U. Federal taxes 2012 S. Federal taxes 2012 citizens and resident aliens, U. Federal taxes 2012 S. Federal taxes 2012 Citizen or Resident Alien V VA Form 21-0172 Certification of permanent and total disability, Veterans. Federal taxes 2012 Veterans Certification by VA of permanent and total disability, Veterans. Federal taxes 2012 Exclusion of nontaxable pension or annuity payment or disability benefits, Step 2. Federal taxes 2012 Total Certain Nontaxable Pensions and Benefits Prev  Up     Home   More Online Publications
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Tax Relief for Victims of Severe Storms, Tornadoes and Flooding in Mississippi

Updated 3/5/2013 to include Greene and Perry counties.

Updated 3/4/2013 to include Jefferson Davis county.

Updated 2/19/2013 to include Marion and Wayne counties.

LA-MS-2013-01, Feb. 14, 2013

NEW ORLEANS — Victims of the severe storms, tornadoes and flooding that took place on Feb. 10, 2013 in parts of Mississippi may qualify for tax relief from the Internal Revenue Service.

The President has declared Forrest, Greene, Jefferson Davis, Lamar, Marion, Perry and Wayne counties a federal disaster area. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Feb. 10, and on or before April 30, have been postponed to April 30, 2013. This includes the April 15 deadline for filing 2012 individual income tax returns, making income tax payments and making 2012 contributions to an individual retirement account (IRA).  

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Feb. 10, and on or before Feb. 27, as long as the deposits are made by Feb. 27, 2013.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 866-562-5227 to request this tax relief.

Covered Disaster Area

The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until April 30 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Feb. 10 and on or before April 30.

The IRS also gives affected taxpayers until April 30 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Feb. 10 and on or before April 30.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Feb. 10 and on or before Feb. 27 provided the taxpayer makes these deposits by Feb. 27.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Mississippi/Severe Storms, Tornadoes, and Flooding” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 800-TAX-FORM (800-829-3676). The IRS toll-free number for general tax questions is 800-829-1040.

Related Information

Page Last Reviewed or Updated: 04-Feb-2014

The Federal Taxes 2012

Federal taxes 2012 2. Federal taxes 2012   Roth IRAs Table of Contents What's New for 2013 What's New for 2014 Reminders Introduction What Is a Roth IRA? When Can a Roth IRA Be Opened? Can You Contribute to a Roth IRA?How Much Can Be Contributed? When Can You Make Contributions? What if You Contribute Too Much? Can You Move Amounts Into a Roth IRA?Conversions Rollover From Employer's Plan Into a Roth IRA Military Death Gratuities and Servicemembers' Group Life Insurance (SGLI) Payments Rollover From a Roth IRA Rollover of Exxon Valdez Settlement Income Rollover of Airline Payments Are Distributions Taxable?What Are Qualified Distributions? Additional Tax on Early Distributions Ordering Rules for Distributions How Do You Figure the Taxable Part? Must You Withdraw or Use Assets?Minimum distributions. Federal taxes 2012 Recognizing Losses on Investments Distributions After Owner's Death What's New for 2013 Roth IRA contribution limit. Federal taxes 2012  If contributions on your behalf are made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $5,500, or Your taxable compensation for the year. Federal taxes 2012 If you were age 50 or older before 2014 and contributions on your behalf were made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $6,500, or Your taxable compensation for the year. Federal taxes 2012 However, if your modified adjusted gross income (AGI) is above a certain amount, your contribution limit may be reduced. Federal taxes 2012 For more information, see How Much Can Be Contributed? under Can You Contribute to a Roth IRA? in this chapter. Federal taxes 2012 Modified AGI limit for Roth IRA contributions increased. Federal taxes 2012  For 2013, your Roth IRA contribution limit is reduced (phased out) in the following situations. Federal taxes 2012 Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $178,000. Federal taxes 2012 You cannot make a Roth IRA contribution if your modified AGI is $188,000 or more. Federal taxes 2012 Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2013 and your modified AGI is at least $112,000. Federal taxes 2012 You cannot make a Roth IRA contribution if your modified AGI is $127,000 or more. Federal taxes 2012 Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. Federal taxes 2012 You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. Federal taxes 2012 See Can You Contribute to a Roth IRA? in this chapter. Federal taxes 2012 Net Investment Income Tax. Federal taxes 2012  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). Federal taxes 2012 However, these distributions are taken into account when determining the modified adjusted gross income threshold. Federal taxes 2012 Distributions from a nonqualified retirement plan are included in net investment income. Federal taxes 2012 See Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions for more information. Federal taxes 2012 What's New for 2014 Modified AGI limit for Roth IRA contributions increased. Federal taxes 2012  For 2014, your Roth IRA contribution limit is reduced (phased out) in the following situations. Federal taxes 2012 Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $181,000. Federal taxes 2012 You cannot make a Roth IRA contribution if your modified AGI is $191,000 or more. Federal taxes 2012 Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2014 and your modified AGI is at least $114,000. Federal taxes 2012 You cannot make a Roth IRA contribution if your modified AGI is $129,000 or more. Federal taxes 2012 Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. Federal taxes 2012 You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. Federal taxes 2012 Reminders Deemed IRAs. Federal taxes 2012  For plan years beginning after 2002, a qualified employer plan (retirement plan) can maintain a separate account or annuity under the plan (a deemed IRA) to receive voluntary employee contributions. Federal taxes 2012 If the separate account or annuity otherwise meets the requirements of an IRA, it will be subject only to IRA rules. Federal taxes 2012 An employee's account can be treated as a traditional IRA or a Roth IRA. Federal taxes 2012 For this purpose, a “qualified employer plan” includes: A qualified pension, profit-sharing, or stock bonus plan (section 401(a) plan), A qualified employee annuity plan (section 403(a) plan), A tax-sheltered annuity plan (section 403(b) plan), and A deferred compensation plan (section 457 plan) maintained by a state, a political subdivision of a state, or an agency or instrumentality of a state or political subdivision of a state. Federal taxes 2012 Designated Roth accounts. Federal taxes 2012  Designated Roth accounts are separate accounts under 401(k), 403(b), or 457(b) plans that accept elective deferrals that are referred to as Roth contributions. Federal taxes 2012 These elective deferrals are included in your income, but qualified distributions from these accounts are not included in your income. Federal taxes 2012 Designated Roth accounts are not IRAs and should not be confused with Roth IRAs. Federal taxes 2012 Contributions, up to their respective limits, can be made to Roth IRAs and designated Roth accounts according to your eligibility to participate. Federal taxes 2012 A contribution to one does not impact your eligibility to contribute to the other. Federal taxes 2012 See Publication 575, for more information on designated Roth accounts. Federal taxes 2012 Introduction Regardless of your age, you may be able to establish and make nondeductible contributions to an individual retirement plan called a Roth IRA. Federal taxes 2012 Contributions not reported. Federal taxes 2012   You do not report Roth IRA contributions on your return. Federal taxes 2012 What Is a Roth IRA? A Roth IRA is an individual retirement plan that, except as explained in this chapter, is subject to the rules that apply to a traditional IRA (defined next). Federal taxes 2012 It can be either an account or an annuity. Federal taxes 2012 Individual retirement accounts and annuities are described in chapter 1 under How Can a Traditional IRA Be Opened. Federal taxes 2012 To be a Roth IRA, the account or annuity must be designated as a Roth IRA when it is opened. Federal taxes 2012 A deemed IRA can be a Roth IRA, but neither a SEP IRA nor a SIMPLE IRA can be designated as a Roth IRA. Federal taxes 2012 Unlike a traditional IRA, you cannot deduct contributions to a Roth IRA. Federal taxes 2012 But, if you satisfy the requirements, qualified distributions (discussed later) are tax free. Federal taxes 2012 Contributions can be made to your Roth IRA after you reach age 70½ and you can leave amounts in your Roth IRA as long as you live. Federal taxes 2012 Traditional IRA. Federal taxes 2012   A traditional IRA is any IRA that is not a Roth IRA or SIMPLE IRA. Federal taxes 2012 Traditional IRAs are discussed in chapter 1. Federal taxes 2012 When Can a Roth IRA Be Opened? You can open a Roth IRA at any time. Federal taxes 2012 However, the time for making contributions for any year is limited. Federal taxes 2012 See When Can You Make Contributions , later under Can You Contribute to a Roth IRA. Federal taxes 2012 Can You Contribute to a Roth IRA? Generally, you can contribute to a Roth IRA if you have taxable compensation (defined later) and your modified AGI (defined later) is less than: $188,000 for married filing jointly or qualifying widow(er), $127,000 for single, head of household, or married filing separately and you did not live with your spouse at any time during the year, and $10,000 for married filing separately and you lived with your spouse at any time during the year. Federal taxes 2012 You may be able to claim a credit for contributions to your Roth IRA. Federal taxes 2012 For more information, see chapter 4. Federal taxes 2012 Is there an age limit for contributions?   Contributions can be made to your Roth IRA regardless of your age. Federal taxes 2012 Can you contribute to a Roth IRA for your spouse?   You can contribute to a Roth IRA for your spouse provided the contributions satisfy the Kay Bailey Hutchison Spousal IRA limit discussed in chapter 1 under How Much Can Be Contributed, you file jointly, and your modified AGI is less than $188,000. Federal taxes 2012 Compensation. Federal taxes 2012   Compensation includes wages, salaries, tips, professional fees, bonuses, and other amounts received for providing personal services. Federal taxes 2012 It also includes commissions, self-employment income, nontaxable combat pay, military differential pay, and taxable alimony and separate maintenance payments. Federal taxes 2012 For more information, see What Is Compensation? under Who Can Open a Traditional IRA? in chapter 1. Federal taxes 2012 Modified AGI. Federal taxes 2012   Your modified AGI for Roth IRA purposes is your adjusted gross income (AGI) as shown on your return with some adjustments. Federal taxes 2012 Use Worksheet 2-1 , later, to determine your modified AGI. Federal taxes 2012    Do not subtract conversion income when figuring your other AGI-based phaseouts and taxable income, such as your deduction for medical and dental expenses. Federal taxes 2012 Subtract them from AGI only for the purpose of figuring your modified AGI for Roth IRA purposes. Federal taxes 2012 How Much Can Be Contributed? The contribution limit for Roth IRAs generally depends on whether contributions are made only to Roth IRAs or to both traditional IRAs and Roth IRAs. Federal taxes 2012 Worksheet 2-1. Federal taxes 2012 Modified Adjusted Gross Income for Roth IRA Purposes Use this worksheet to figure your modified adjusted gross income for Roth IRA purposes. Federal taxes 2012 1. Federal taxes 2012 Enter your adjusted gross income from Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37 1. Federal taxes 2012   2. Federal taxes 2012 Enter any income resulting from the conversion of an IRA (other than a Roth IRA) to a Roth IRA (included on Form 1040, line 15b, Form 1040A, line 11b, or Form 1040NR, line 16b) and a rollover from a qualified retirement plan to a Roth IRA (included on Form 1040, line 16b, Form 1040A, line 12b, or Form 1040NR, line 17b) 2. Federal taxes 2012   3. Federal taxes 2012 Subtract line 2 from line 1 3. Federal taxes 2012   4. Federal taxes 2012 Enter any traditional IRA deduction from Form 1040, line 32; Form 1040A, line 17; or Form 1040NR, line 32 4. Federal taxes 2012   5. Federal taxes 2012 Enter any student loan interest deduction from Form 1040, line 33; Form 1040A, line 18; or Form 1040NR, line 33 5. Federal taxes 2012   6. Federal taxes 2012 Enter any tuition and fees deduction from Form 1040, line 34, or Form 1040A, line 19 6. Federal taxes 2012   7. Federal taxes 2012 Enter any domestic production activities deduction from Form 1040, line 35, or Form 1040NR, line 34 7. Federal taxes 2012   8. Federal taxes 2012 Enter any foreign earned income exclusion and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18 8. Federal taxes 2012   9. Federal taxes 2012 Enter any foreign housing deduction from Form 2555, line 50 9. Federal taxes 2012   10. Federal taxes 2012 Enter any excludable qualified savings bond interest from Form 8815, line 14 10. Federal taxes 2012   11. Federal taxes 2012 Enter any excluded employer-provided adoption benefits from Form 8839, line 28 11. Federal taxes 2012   12. Federal taxes 2012 Add the amounts on lines 3 through 11 12. Federal taxes 2012   13. Federal taxes 2012 Enter: $188,000 if married filing jointly or qualifying widow(er), $10,000 if married filing separately and you lived with your spouse at any time during the year, or $127,000 for all others 13. Federal taxes 2012   Is the amount on line 12 more than the amount on line 13? If yes, see the note below. Federal taxes 2012  If no, the amount on line 12 is your modified adjusted gross income for Roth IRA purposes. Federal taxes 2012       Note. Federal taxes 2012 If the amount on line 12 is more than the amount on line 13 and you have other income or loss items, such as social security income or passive activity losses, that are subject to AGI-based phaseouts, you can refigure your AGI solely for the purpose of figuring your modified AGI for Roth IRA purposes. Federal taxes 2012 (If you receive social security benefits, use Worksheet 1 in Appendix B to refigure your AGI. Federal taxes 2012 ) Then go to line 3 above in this Worksheet 2-1 to refigure your modified AGI. Federal taxes 2012 If you do not have other income or loss items subject to AGI-based phaseouts, your modified adjusted gross income for Roth IRA purposes is the amount on line 12 above. Federal taxes 2012 Roth IRAs only. Federal taxes 2012   If contributions are made only to Roth IRAs, your contribution limit generally is the lesser of: $5,500 ($6,500 if you are age 50 or older), or Your taxable compensation. Federal taxes 2012   However, if your modified AGI is above a certain amount, your contribution limit may be reduced, as explained later under Contribution limit reduced . Federal taxes 2012 Roth IRAs and traditional IRAs. Federal taxes 2012   If contributions are made to both Roth IRAs and traditional IRAs established for your benefit, your contribution limit for Roth IRAs generally is the same as your limit would be if contributions were made only to Roth IRAs, but then reduced by all contributions for the year to all IRAs other than Roth IRAs. Federal taxes 2012 Employer contributions under a SEP or SIMPLE IRA plan do not affect this limit. Federal taxes 2012   This means that your contribution limit is the lesser of: $5,500 ($6,500 if you are age 50 or older) minus all contributions (other than employer contributions under a SEP or SIMPLE IRA plan) for the year to all IRAs other than Roth IRAs, or Your taxable compensation minus all contributions (other than employer contributions under a SEP or SIMPLE IRA plan) for the year to all IRAs other than Roth IRAs. Federal taxes 2012   However, if your modified AGI is above a certain amount, your contribution limit may be reduced, as explained below under Contribution limit reduced . Federal taxes 2012   Simplified employee pensions (SEPs) are discussed in Publication 560. Federal taxes 2012 Savings incentive match plans for employees (SIMPLEs) are discussed in chapter 3. Federal taxes 2012 Repayment of reservist distributions. Federal taxes 2012   You can repay qualified reservist distributions even if the repayments would cause your total contributions to the Roth IRA to be more than the general limit on contributions. Federal taxes 2012 However, the total repayments cannot be more than the amount of your distribution. Federal taxes 2012 Note. Federal taxes 2012 If you make repayments of qualified reservist distributions to a Roth IRA, increase your basis in the Roth IRA by the amount of the repayment. Federal taxes 2012 For more information, see Qualified reservist repayments under How Much Can Be Contributed? in chapter 1. Federal taxes 2012 Contribution limit reduced. Federal taxes 2012   If your modified AGI is above a certain amount, your contribution limit is gradually reduced. Federal taxes 2012 Use Table 2-1, later, to determine if this reduction applies to you. Federal taxes 2012 Table 2-1. Federal taxes 2012 Effect of Modified AGI on Roth IRA Contribution This table shows whether your contribution to a Roth IRA is affected by the amount of your modified adjusted gross income (modified AGI). Federal taxes 2012 IF you have taxable compensation and your filing status is . Federal taxes 2012 . Federal taxes 2012 . Federal taxes 2012 AND your modified AGI is . Federal taxes 2012 . Federal taxes 2012 . Federal taxes 2012 THEN . Federal taxes 2012 . Federal taxes 2012 . Federal taxes 2012 married filing jointly or  qualifying widow(er) less than $178,000 you can contribute up to $5,500 ($6,500 if you are age 50 or older) as explained under How Much Can Be Contributed . Federal taxes 2012 at least $178,000 but less than $188,000 the amount you can contribute is reduced as explained under Contribution limit reduced . Federal taxes 2012 $188,000 or more you cannot contribute to a Roth IRA. Federal taxes 2012 married filing separately and you lived with your spouse at any time during the year zero (-0-) you can contribute up to $5,500 ($6,500 if you are age 50 or older) as explained under How Much Can Be Contributed . Federal taxes 2012 more than zero (-0-) but less than $10,000 the amount you can contribute is reduced as explained under Contribution limit reduced . Federal taxes 2012 $10,000 or more you cannot contribute to a Roth IRA. Federal taxes 2012 single, head of household,  or married filing separately and you did not live with your spouse at any time during the year less than $112,000 you can contribute up to $5,500 ($6,500 if you are age 50 or older) as explained under How Much Can Be Contributed . Federal taxes 2012 at least $112,000 but less than $127,000 the amount you can contribute is reduced as explained under Contribution limit reduced . Federal taxes 2012 $127,000 or more you cannot contribute to a Roth IRA. Federal taxes 2012 Figuring the reduction. Federal taxes 2012   If the amount you can contribute must be reduced, use Worksheet 2-2, later, to figure your reduced contribution limit. Federal taxes 2012 Worksheet 2-2. Federal taxes 2012 Determining Your Reduced Roth IRA Contribution Limit Before using this worksheet, check Table 2-1, earlier, to determine whether or not your Roth IRA contribution limit is reduced. Federal taxes 2012 If it is, use this worksheet to determine how much it is reduced. Federal taxes 2012 1. Federal taxes 2012 Enter your modified AGI for Roth IRA purposes (Worksheet 2-1, line 12) 1. Federal taxes 2012   2. Federal taxes 2012 Enter: $178,000 if filing a joint return or qualifying widow(er), $-0- if married filing a separate return and you lived with your spouse at any time in 2013, or $112,000 for all others 2. Federal taxes 2012   3. Federal taxes 2012 Subtract line 2 from line 1 3. Federal taxes 2012   4. Federal taxes 2012 Enter: $10,000 if filing a joint return or qualifying widow(er) or married filing a separate return and you lived with your spouse at any time during the year, or $15,000 for all others 4. Federal taxes 2012   5. Federal taxes 2012 Divide line 3 by line 4 and enter the result as a decimal (rounded to at least three places). Federal taxes 2012 If the result is 1. Federal taxes 2012 000 or more, enter 1. Federal taxes 2012 000 5. Federal taxes 2012   6. Federal taxes 2012 Enter the lesser of: $5,500 ($6,500 if you are age 50 or older), or Your taxable compensation 6. Federal taxes 2012   7. Federal taxes 2012 Multiply line 5 by line 6 7. Federal taxes 2012   8. Federal taxes 2012 Subtract line 7 from line 6. Federal taxes 2012 Round the result up to the nearest $10. Federal taxes 2012 If the result is less than $200, enter $200 8. Federal taxes 2012   9. Federal taxes 2012 Enter contributions for the year to other IRAs 9. Federal taxes 2012   10. Federal taxes 2012 Subtract line 9 from line 6 10. Federal taxes 2012   11. Federal taxes 2012 Enter the lesser of line 8 or line 10. Federal taxes 2012 This is your reduced Roth IRA contribution limit 11. Federal taxes 2012      Round your reduced contribution limit up to the nearest $10. Federal taxes 2012 If your reduced contribution limit is more than $0, but less than $200, increase the limit to $200. Federal taxes 2012 Example. Federal taxes 2012 You are a 45-year-old, single individual with taxable compensation of $113,000. Federal taxes 2012 You want to make the maximum allowable contribution to your Roth IRA for 2013. Federal taxes 2012 Your modified AGI for 2013 is $113,000. Federal taxes 2012 You have not contributed to any traditional IRA, so the maximum contribution limit before the modified AGI reduction is $5,500. Federal taxes 2012 You figure your reduced Roth IRA contribution of $5,140 as shown on Worksheet 2-2. Federal taxes 2012 Example—Illustrated, later. Federal taxes 2012   Worksheet 2-2. Federal taxes 2012 Example—Illustrated Before using this worksheet, check Table 2-1, earlier, to determine whether or not your Roth IRA contribution limit is reduced. Federal taxes 2012 If it is, use this worksheet to determine how much it is reduced. Federal taxes 2012 1. Federal taxes 2012 Enter your modified AGI for Roth IRA purposes (Worksheet 2-1, line 12) 1. Federal taxes 2012 113,000 2. Federal taxes 2012 Enter: $178,000 if filing a joint return or qualifying widow(er), $-0- if married filing a separate return and you lived with your spouse at any time in 2013, or $112,000 for all others 2. Federal taxes 2012 112,000 3. Federal taxes 2012 Subtract line 2 from line 1 3. Federal taxes 2012 1,000 4. Federal taxes 2012 Enter: $10,000 if filing a joint return or qualifying widow(er) or married filing a separate return and you lived with your spouse at any time during the year, or $15,000 for all others 4. Federal taxes 2012 15,000 5. Federal taxes 2012 Divide line 3 by line 4 and enter the result as a decimal (rounded to at least three places). Federal taxes 2012 If the result is 1. Federal taxes 2012 000 or more, enter 1. Federal taxes 2012 000 5. Federal taxes 2012 . Federal taxes 2012 067 6. Federal taxes 2012 Enter the lesser of: $5,500 ($6,500 if you are age 50 or older), or Your taxable compensation 6. Federal taxes 2012 5,500 7. Federal taxes 2012 Multiply line 5 by line 6 7. Federal taxes 2012 369 8. Federal taxes 2012 Subtract line 7 from line 6. Federal taxes 2012 Round the result up to the nearest $10. Federal taxes 2012 If the result is less than $200, enter $200 8. Federal taxes 2012 5,140 9. Federal taxes 2012 Enter contributions for the year to other IRAs 9. Federal taxes 2012 0 10. Federal taxes 2012 Subtract line 9 from line 6 10. Federal taxes 2012 5,500 11. Federal taxes 2012 Enter the lesser of line 8 or line 10. Federal taxes 2012 This is your reduced Roth IRA contribution limit 11. Federal taxes 2012 5,140 When Can You Make Contributions? You can make contributions to a Roth IRA for a year at any time during the year or by the due date of your return for that year (not including extensions). Federal taxes 2012 You can make contributions for 2013 by the due date (not including extensions) for filing your 2013 tax return. Federal taxes 2012 This means that most people can make contributions for 2013 by April 15, 2014. Federal taxes 2012 What if You Contribute Too Much? A 6% excise tax applies to any excess contribution to a Roth IRA. Federal taxes 2012 Excess contributions. Federal taxes 2012   These are the contributions to your Roth IRAs for a year that equal the total of: Amounts contributed for the tax year to your Roth IRAs (other than amounts properly and timely rolled over from a Roth IRA or properly converted from a traditional IRA or rolled over from a qualified retirement plan, as described later) that are more than your contribution limit for the year (explained earlier under How Much Can Be Contributed? ), plus Any excess contributions for the preceding year, reduced by the total of: Any distributions out of your Roth IRAs for the year, plus Your contribution limit for the year minus your contributions to all your IRAs for the year. Federal taxes 2012 Withdrawal of excess contributions. Federal taxes 2012   For purposes of determining excess contributions, any contribution that is withdrawn on or before the due date (including extensions) for filing your tax return for the year is treated as an amount not contributed. Federal taxes 2012 This treatment only applies if any earnings on the contributions are also withdrawn. Federal taxes 2012 The earnings are considered earned and received in the year the excess contribution was made. Federal taxes 2012   If you timely filed your 2013 tax return without withdrawing a contribution that you made in 2013, you can still have the contribution returned to you within 6 months of the due date of your 2013 tax return, excluding extensions. Federal taxes 2012 If you do, file an amended return with “Filed pursuant to section 301. Federal taxes 2012 9100-2” written at the top. Federal taxes 2012 Report any related earnings on the amended return and include an explanation of the withdrawal. Federal taxes 2012 Make any other necessary changes on the amended return. Federal taxes 2012 Applying excess contributions. Federal taxes 2012    If contributions to your Roth 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. Federal taxes 2012 Can You Move Amounts Into a Roth IRA? You may be able to convert amounts from either a traditional, SEP, or SIMPLE IRA into a Roth IRA. Federal taxes 2012 You may be able to roll over amounts from a qualified retirement plan to a Roth IRA. Federal taxes 2012 You may be able to recharacterize contributions made to one IRA as having been made directly to a different IRA. Federal taxes 2012 You can roll amounts over from a designated Roth account or from one Roth IRA to another Roth IRA. Federal taxes 2012 Conversions You can convert a traditional IRA to a Roth IRA. Federal taxes 2012 The conversion is treated as a rollover, regardless of the conversion method used. Federal taxes 2012 Most of the rules for rollovers, described in chapter 1 under Rollover From One IRA Into Another , apply to these rollovers. Federal taxes 2012 However, the 1-year waiting period does not apply. Federal taxes 2012 Conversion methods. Federal taxes 2012   You can convert amounts from a traditional IRA to a Roth IRA in any of the following three ways. Federal taxes 2012 Rollover. Federal taxes 2012 You can receive a distribution from a traditional IRA and roll it over (contribute it) to a Roth IRA within 60 days after the distribution. Federal taxes 2012 Trustee-to-trustee transfer. Federal taxes 2012 You can direct the trustee of the traditional IRA to transfer an amount from the traditional IRA to the trustee of the Roth IRA. Federal taxes 2012 Same trustee transfer. Federal taxes 2012 If the trustee of the traditional IRA also maintains the Roth IRA, you can direct the trustee to transfer an amount from the traditional IRA to the Roth IRA. Federal taxes 2012 Same trustee. Federal taxes 2012   Conversions made with the same trustee can be made by redesignating the traditional IRA as a Roth IRA, rather than opening a new account or issuing a new contract. Federal taxes 2012 Income. Federal taxes 2012   You must include in your gross income distributions from a traditional IRA that you would have had to include in income if you had not converted them into a Roth IRA. Federal taxes 2012 These amounts are normally included in income on your return for the year that you converted them from a traditional IRA to a Roth IRA. Federal taxes 2012 If you must include any amount in your gross income, you may have to increase your withholding or make estimated tax payments. Federal taxes 2012 See Publication 505, Tax Withholding and Estimated Tax. Federal taxes 2012 More information. Federal taxes 2012   For more information on conversions, see Converting From Any Traditional IRA Into a Roth IRA in chapter 1. Federal taxes 2012 Rollover From Employer's Plan Into a Roth IRA You can roll over into a Roth IRA all or part of an eligible rollover distribution you receive from your (or your deceased spouse's): Employer's qualified pension, profit-sharing, or stock bonus plan (including a 401(k) plan); Annuity plan; Tax-sheltered annuity plan (section 403(b) plan); or Governmental deferred compensation plan (section 457 plan). Federal taxes 2012 Any amount rolled over is subject to the same rules for converting a traditional IRA into a Roth IRA. Federal taxes 2012 See Converting From Any Traditional IRA Into a Roth IRA in chapter 1. Federal taxes 2012 Also, the rollover contribution must meet the rollover requirements that apply to the specific type of retirement plan. Federal taxes 2012 Rollover methods. Federal taxes 2012   You can roll over amounts from a qualified retirement plan to a Roth IRA in one of the following ways. Federal taxes 2012 Rollover. Federal taxes 2012 You can receive a distribution from a qualified retirement plan and roll it over (contribute) to a Roth IRA within 60 days after the distribution. Federal taxes 2012 Since the distribution is paid directly to you, the payer generally must withhold 20% of it. Federal taxes 2012 Direct rollover option. Federal taxes 2012 Your employer's qualified plan must give you the option to have any part of an eligible rollover distribution paid directly to a Roth IRA. Federal taxes 2012 Generally, no tax is withheld from any part of the designated distribution that is directly paid to the trustee of the Roth IRA. Federal taxes 2012 Rollover by nonspouse beneficiary. Federal taxes 2012   If you are a designated beneficiary (other than a surviving spouse) of a deceased employee, you can roll over all or part of an eligible rollover distribution from one of the types of plans listed above into a Roth IRA. Federal taxes 2012 You must make the rollover by a direct trustee-to-trustee transfer into an inherited Roth IRA. Federal taxes 2012   You will determine your required minimum distributions in years after you make the rollover based on whether the employee died before his or her required beginning date for taking distributions from the plan. Federal taxes 2012 For more information, see Distributions after the employee’s death under Tax on Excess Accumulation in Publication 575. Federal taxes 2012 Income. Federal taxes 2012   You must include in your gross income distributions from a qualified retirement plan that you would have had to include in income if you had not rolled them over into a Roth IRA. Federal taxes 2012 You do not include in gross income any part of a distribution from a qualified retirement plan that is a return of contributions (after-tax contributions) to the plan that were taxable to you when paid. Federal taxes 2012 These amounts are normally included in income on your return for the year of the rollover from the qualified employer plan to a Roth IRA. Federal taxes 2012 If you must include any amount in your gross income, you may have to increase your withholding or make estimated tax payments. Federal taxes 2012 See Publication 505, Tax Withholding and Estimated Tax. Federal taxes 2012 For more information on eligible rollover distributions from qualified retirement plans and withholding, see Rollover From Employer's Plan Into an IRA in chapter 1. Federal taxes 2012 Military Death Gratuities and Servicemembers' Group Life Insurance (SGLI) Payments If you received a military death gratuity or SGLI payment with respect to a death from injury that occurred after October 6, 2001, you can contribute (roll over) all or part of the amount received to your Roth IRA. Federal taxes 2012 The contribution is treated as a qualified rollover contribution. Federal taxes 2012 The amount you can roll over to your Roth IRA cannot exceed the total amount that you received reduced by any part of that amount that was contributed to a Coverdell ESA or another Roth IRA. Federal taxes 2012 Any military death gratuity or SGLI payment contributed to a Roth IRA is disregarded for purposes of the 1-year waiting period between rollovers. Federal taxes 2012 The rollover must be completed before the end of the 1-year period beginning on the date you received the payment. Federal taxes 2012 The amount contributed to your Roth IRA is treated as part of your cost basis (investment in the contract) in the Roth IRA that is not taxable when distributed. Federal taxes 2012 Rollover From a Roth IRA You can withdraw, tax free, all or part of the assets from one Roth IRA if you contribute them within 60 days to another Roth IRA. Federal taxes 2012 Most of the rules for rollovers, described in chapter 1 under Rollover From One IRA Into Another , apply to these rollovers. Federal taxes 2012 However, rollovers from retirement plans other than Roth IRAs are disregarded for purposes of the 1-year waiting period between rollovers. Federal taxes 2012 A rollover from a Roth IRA to an employer retirement plan is not allowed. Federal taxes 2012 A rollover from a designated Roth account can only be made to another designated Roth account or to a Roth IRA. Federal taxes 2012 If you roll over an amount from one Roth IRA to another Roth IRA, the 5-year period used to determine qualified distributions does not change. Federal taxes 2012 The 5-year period begins with the first taxable year for which the contribution was made to the initial Roth IRA. Federal taxes 2012 See What are Qualified Distributions , later. Federal taxes 2012 Rollover of Exxon Valdez Settlement Income If you are a qualified taxpayer (defined in chapter 1, earlier) and you received qualified settlement income (defined in chapter 1, earlier), you can contribute all or part of the amount received to an eligible retirement plan which includes a Roth IRA. Federal taxes 2012 The rules for contributing qualified settlement income to a Roth IRA are the same as the rules for contributing qualified settlement income to a traditional IRA with the following exception. Federal taxes 2012 Qualified settlement income that is contributed to a Roth IRA, or to a designated Roth account, will be: Included in your taxable income for the year the qualified settlement income was received, and Treated as part of your cost basis (investment in the contract) in the Roth IRA that is not taxable when distributed. Federal taxes 2012 For more information, see Rollover of Exxon Valdez Settlement Income in chapter 1. Federal taxes 2012 Rollover of Airline Payments If you are a qualified airline employee (defined next), you may contribute any portion of an airline payment (defined below) you receive to a Roth IRA. Federal taxes 2012 The contribution must be made within 180 days from the date you received the payment. Federal taxes 2012 The contribution will be treated as a qualified rollover contribution. Federal taxes 2012 The rollover contribution is included in income to the extent it would be included in income if it were not part of the rollover contribution. Federal taxes 2012 Also, any reduction in the airline payment amount on account of employment taxes shall be disregarded when figuring the amount you can contribute to your Roth IRA. Federal taxes 2012 Qualified airline employee. Federal taxes 2012    A current or former employee of a commercial airline carrier who was a participant in a qualified defined benefit plan maintained by the carrier which was terminated or became subject to restrictions under Section 402(b) of the Pension Protection Act of 2006. Federal taxes 2012 These provisions also apply to surviving spouses of qualified airline employees. Federal taxes 2012 Airline payment. Federal taxes 2012    An airline payment is any payment of money or other property that is paid to a qualified airline employee from a commercial airline carrier. Federal taxes 2012 The payment also must be made both: Under the approval of an order of federal bankruptcy court in a case filed after September 11, 2001, and before January 1, 2007, and In respect of the qualified airline employee’s interest in a bankruptcy claim against the airline carrier, any note of the carrier (or amount paid in lieu of a note being issued), or any other fixed obligation of the carrier to pay a lump sum amount. Federal taxes 2012 Any reduction in the airline payment amount on account of employment taxes shall be disregarded when figuring the amount you can roll over to your traditional IRA. Federal taxes 2012 Also, an airline payment shall not include any amount payable on the basis of the airline carrier’s future earnings or profits. Federal taxes 2012 Are Distributions Taxable? You do not include in your gross income qualified distributions or distributions that are a return of your regular contributions from your Roth IRA(s). Federal taxes 2012 You also do not include distributions from your Roth IRA that you roll over tax free into another Roth IRA. Federal taxes 2012 You may have to include part of other distributions in your income. Federal taxes 2012 See Ordering Rules for Distributions , later. Federal taxes 2012 Basis of distributed property. Federal taxes 2012   The basis of property distributed from a Roth IRA is its fair market value (FMV) on the date of distribution, whether or not the distribution is a qualified distribution. Federal taxes 2012 Withdrawals of contributions by due date. Federal taxes 2012   If you withdraw contributions (including any net earnings on the contributions) by the due date of your return for the year in which you made the contribution, the contributions are treated as if you never made them. Federal taxes 2012 If you have an extension of time to file your return, you can withdraw the contributions and earnings by the extended due date. Federal taxes 2012 The withdrawal of contributions is tax free, but you must include the earnings on the contributions in income for the year in which you made the contributions. Federal taxes 2012 What Are Qualified Distributions? A qualified distribution is any payment or distribution from your Roth IRA that meets the following requirements. Federal taxes 2012 It is made after the 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for your benefit, and The payment or distribution is: Made on or after the date you reach age 59½, Made because you are disabled (defined earlier), Made to a beneficiary or to your estate after your death, or One that meets the requirements listed under First home under Exceptions in chapter 1 (up to a $10,000 lifetime limit). Federal taxes 2012 Additional Tax on Early Distributions If you receive a distribution that is not a qualified distribution, you may have to pay the 10% additional tax on early distributions as explained in the following paragraphs. Federal taxes 2012 Distributions of conversion and certain rollover contributions within 5-year period. Federal taxes 2012   If, within the 5-year period starting with the first day of your tax year in which you convert an amount from a traditional IRA or rollover an amount from a qualified retirement plan to a Roth IRA, you take a distribution from a Roth IRA, you may have to pay the 10% additional tax on early distributions. Federal taxes 2012 You generally must pay the 10% additional tax on any amount attributable to the part of the amount converted or rolled over (the conversion or rollover contribution) that you had to include in income (recapture amount). Federal taxes 2012 A separate 5-year period applies to each conversion and rollover. Federal taxes 2012 See Ordering Rules for Distributions , later, to determine the recapture amount, if any. Federal taxes 2012   The 5-year period used for determining whether the 10% early distribution tax applies to a distribution from a conversion or rollover contribution is separately determined for each conversion and rollover, and is not necessarily the same as the 5-year period used for determining whether a distribution is a qualified distribution. Federal taxes 2012 See What Are Qualified Distributions , earlier. Federal taxes 2012   For example, if a calendar-year taxpayer makes a conversion contribution on February 25, 2013, and makes a regular contribution for 2012 on the same date, the 5-year period for the conversion begins January 1, 2013, while the 5-year period for the regular contribution begins on January 1, 2012. Federal taxes 2012   Unless one of the exceptions listed later applies, you must pay the additional tax on the portion of the distribution attributable to the part of the conversion or rollover contribution that you had to include in income because of the conversion or rollover. Federal taxes 2012   You must pay the 10% additional tax in the year of the distribution, even if you had included the conversion or rollover contribution in an earlier year. Federal taxes 2012 You also must pay the additional tax on any portion of the distribution attributable to earnings on contributions. Federal taxes 2012 Other early distributions. Federal taxes 2012   Unless one of the exceptions listed below applies, you must pay the 10% additional tax on the taxable part of any distributions that are not qualified distributions. Federal taxes 2012 Exceptions. Federal taxes 2012   You may not have to pay the 10% additional tax in the following situations. Federal taxes 2012 You have reached age 59½. Federal taxes 2012 You are totally and permanently disabled. Federal taxes 2012 You are the beneficiary of a deceased IRA owner. Federal taxes 2012 You use the distribution to buy, build, or rebuild a first home. Federal taxes 2012 The distributions are part of a series of substantially equal payments. Federal taxes 2012 You have unreimbursed medical expenses that are more than 10% (or 7. Federal taxes 2012 5% if you or your spouse was born before January 2, 1949) of your adjusted gross income (defined earlier) for the year. Federal taxes 2012 You are paying medical insurance premiums during a period of unemployment. Federal taxes 2012 The distributions are not more than your qualified higher education expenses. Federal taxes 2012 The distribution is due to an IRS levy of the qualified plan. Federal taxes 2012 The distribution is a qualified reservist distribution. Federal taxes 2012 Most of these exceptions are discussed earlier in chapter 1 under Early Distributions . Federal taxes 2012 Please click here for the text description of the image. Federal taxes 2012 Is Roth Distributions a Qualified Distribution? Ordering Rules for Distributions If you receive a distribution from your Roth IRA that is not a qualified distribution, part of it may be taxable. Federal taxes 2012 There is a set order in which contributions (including conversion contributions and rollover contributions from qualified retirement plans) and earnings are considered to be distributed from your Roth IRA. Federal taxes 2012 For these purposes, disregard the withdrawal of excess contributions and the earnings on them (discussed earlier under What if You Contribute Too Much ). Federal taxes 2012 Order the distributions as follows. Federal taxes 2012 Regular contributions. Federal taxes 2012 Conversion and rollover contributions, on a first-in, first-out basis (generally, total conversions and rollovers from the earliest year first). Federal taxes 2012 See Aggregation (grouping and adding) rules, later. Federal taxes 2012 Take these conversion and rollover contributions into account as follows: Taxable portion (the amount required to be included in gross income because of the conversion or rollover) first, and then the Nontaxable portion. Federal taxes 2012 Earnings on contributions. Federal taxes 2012 Disregard rollover contributions from other Roth IRAs for this purpose. Federal taxes 2012 Aggregation (grouping and adding) rules. Federal taxes 2012   Determine the taxable amounts distributed (withdrawn), distributions, and contributions by grouping and adding them together as follows. Federal taxes 2012 Add all distributions from all your Roth IRAs during the year together. Federal taxes 2012 Add all regular contributions made for the year (including contributions made after the close of the year, but before the due date of your return) together. Federal taxes 2012 Add this total to the total undistributed regular contributions made in prior years. Federal taxes 2012 Add all conversion and rollover contributions made during the year together. Federal taxes 2012 For purposes of the ordering rules, in the case of any conversion or rollover in which the conversion or rollover distribution is made in 2013 and the conversion or rollover contribution is made in 2014, treat the conversion or rollover contribution as contributed before any other conversion or rollover contributions made in 2014. Federal taxes 2012 Add any recharacterized contributions that end up in a Roth IRA to the appropriate contribution group for the year that the original contribution would have been taken into account if it had been made directly to the Roth IRA. Federal taxes 2012   Disregard any recharacterized contribution that ends up in an IRA other than a Roth IRA for the purpose of grouping (aggregating) both contributions and distributions. Federal taxes 2012 Also disregard any amount withdrawn to correct an excess contribution (including the earnings withdrawn) for this purpose. Federal taxes 2012 Example. Federal taxes 2012 On October 15, 2009, Justin converted all $80,000 in his traditional IRA to his Roth IRA. Federal taxes 2012 His Forms 8606 from prior years show that $20,000 of the amount converted is his basis. Federal taxes 2012 Justin included $60,000 ($80,000 − $20,000) in his gross income. Federal taxes 2012 On February 23, 2013, Justin made a regular contribution of $5,000 to a Roth IRA. Federal taxes 2012 On November 8, 2013, at age 60, Justin took a $7,000 distribution from his Roth IRA. Federal taxes 2012 The first $5,000 of the distribution is a return of Justin's regular contribution and is not includible in his income. Federal taxes 2012 The next $2,000 of the distribution is not includible in income because it was included previously. Federal taxes 2012 Figuring your recapture amount. Federal taxes 2012   If you had an early distribution from your Roth IRAs in 2013, you must allocate the early distribution by using the Recapture Amount—Allocation Chart, later. Federal taxes 2012 Recapture Amount—Allocation Chart Enter the amount from your 2013 Form 8606, line 19   Before you begin: You will need your prior year Form(s) 8606 and income tax return(s) if you entered an amount on any line(s) as indicated below. Federal taxes 2012   You will now allocate the amount you entered above (2013 Form 8606, line 19) in the order shown, to the amounts on the lines listed below (to the extent a prior year distribution was not allocable to the amount). Federal taxes 2012 The maximum amount you can enter on each line below is the amount entered on the referenced lines of the form for that year. Federal taxes 2012 Note. Federal taxes 2012 Once you have allocated the full amount from your 2013 Form 8606, line 19, STOP. Federal taxes 2012 See the Example , earlier. Federal taxes 2012 Tax Year Your Form 2013 Form 8606, line 20   Form 8606, line 22   1998 Form 8606, line 16   Form 8606, line 15   1999 Form 8606, line 16   Form 8606, line 15   2000 Form 8606, line 16   Form 8606, line 15   2001 Form 8606, line 18   Form 8606, line 17   2002 Form 8606, line 18   Form 8606, line 17   2003 Form 8606, line 18   Form 8606, line 17   2004 Form 8606, line 18   Form 8606, line 17   2005 Form 8606, line 18   Form 8606, line 17   2006 Form 8606, line 18   Form 8606, line 17   2007 Form 8606, line 18   Form 8606, line 17   2008 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2009 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2010 Form 8606, lines 18 and 23   Form 8606, lines 17 and 22   2011 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2012 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2013 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2013 Form 8606, line 25       *Only include those amounts rolled over to a Roth IRA. Federal taxes 2012  **Only include any contributions (usually Form 1099-R, box 5) that were taxable to you when made and rolled over to a Roth IRA. Federal taxes 2012 Amount to include on Form 5329, line 1. Federal taxes 2012   Include on line 1 of your 2013 Form 5329 the following four amounts from the Recapture Amount—Allocation Chart that you filled out. Federal taxes 2012 The amount you allocated to line 20 of your 2013 Form 8606. Federal taxes 2012 The amount(s) allocated to your 2009 through 2013 Forms 8606, line 18, and your 2010 Form 8606, line 23. Federal taxes 2012 The amount(s) allocated to your 2009, 2011, 2012, and 2013 Forms 1040, line 16b; Forms 1040A, line 12b; and Forms 1040NR, line 17b. Federal taxes 2012 The amount from your 2013 Form 8606, line 25. Federal taxes 2012   Also, include any amount you allocated to line 20 of your 2013 Form 8606 on your 2013 Form 5329, line 2, and enter exception number 09. Federal taxes 2012 Example. Federal taxes 2012 Ishmael, age 32, opened a Roth IRA in 2000. Federal taxes 2012 He made the maximum contributions to it every year. Federal taxes 2012 In addition, he made the following transactions into his Roth IRA. Federal taxes 2012 In 2005, he converted $10,000 from his traditional IRA into his Roth IRA. Federal taxes 2012 He filled out a 2005 Form 8606 and attached it with his 2005 Form 1040. Federal taxes 2012 He entered $0 on line 17 of Form 8606 because he took a deduction for all the contributions to the traditional IRA, therefore he has no basis. Federal taxes 2012 He entered $10,000 on line 18 of Form 8606. Federal taxes 2012 In 2011, he rolled over the entire balance of his qualified retirement plan, $20,000, into a Roth IRA when he changed jobs. Federal taxes 2012 He used a 2011 Form 1040 to file his taxes. Federal taxes 2012 He entered $20,000 on line 16a of Form 1040 because that was the amount reported in box 1 of his 2011 Form 1099-R. Federal taxes 2012 Box 5 of his 2011 Form 1099-R reported $0 since he did not make any after-tax contributions to the qualified retirement plan. Federal taxes 2012 He entered $20,000 on line 16b of Form 1040 since that is the taxable amount that was rolled over in 2011. Federal taxes 2012 The total balance in his Roth IRA as of January 1, 2013 was $105,000 ($50,000 in contributions from 2000 through 2012 + $10,000 from the 2005 conversion + $20,000 from the 2011 rollover + $25,000 from earnings). Federal taxes 2012 He has not taken any early distribution from his Roth IRA before 2013. Federal taxes 2012 In 2013, he made the maximum contribution of $5,500 to his Roth IRA. Federal taxes 2012 In August of 2013, he took a $85,500 early distribution from his Roth IRA to use as a down payment on the purchase of his first home. Federal taxes 2012 See his filled out Illustrated Recapture Amount—Allocation Chart, later, to see how he allocated the amounts from the above transactions. Federal taxes 2012 Based on his allocation, he would enter $20,000 on his 2013 Form 5329, line 1 (see Amount to include on Form 5329, line 1 , above). Federal taxes 2012 He should also report $10,000 on his 2013 Form 5329, line 2, and enter exception 09 since that amount is not subject to the 10% additional tax on early distributions. Federal taxes 2012 Illustrated Recapture Amount—Allocation Chart Enter the amount from your 2013 Form 8606, line 19 $85,500 Before you begin: You will need your prior year Form(s) 8606 and income tax return(s) if you entered an amount on any line(s) as indicated below. Federal taxes 2012   You will now allocate the amount you entered above (2013 Form 8606, line 19) in the order shown, to the amounts on the lines listed below (to the extent a prior year distribution was not allocable to the amount). Federal taxes 2012 The maximum amount you can enter on each line below is the amount entered on the referenced lines of the form for that year. Federal taxes 2012 Note. Federal taxes 2012 Once you have allocated the full amount from your 2013 Form 8606, line 19, STOP. Federal taxes 2012 See the Example , earlier. Federal taxes 2012 Tax Year Your Form 2013 Form 8606, line 20 $10,000 Form 8606, line 22 $55,500 1998 Form 8606, line 16   Form 8606, line 15   1999 Form 8606, line 16   Form 8606, line 15   2000 Form 8606, line 16   Form 8606, line 15   2001 Form 8606, line 18   Form 8606, line 17   2002 Form 8606, line 18   Form 8606, line 17   2003 Form 8606, line 18   Form 8606, line 17   2004 Form 8606, line 18   Form 8606, line 17   2005 Form 8606, line 18 $10,000 Form 8606, line 17 $-0- 2006 Form 8606, line 18   Form 8606, line 17   2007 Form 8606, line 18   Form 8606, line 17   2008 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2009 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2010 Form 8606, lines 18 and 23   Form 8606, lines 17 and 22   2011 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b* $10,000 Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2012 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2013 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2013 Form 8606, line 25       *Only include those amounts rolled over to a Roth IRA. Federal taxes 2012  **Only include any contributions (usually Form 1099-R, box 5) that were taxable to you when made and rolled over to a Roth IRA. Federal taxes 2012 How Do You Figure the Taxable Part? To figure the taxable part of a distribution that is not a qualified distribution, complete Form 8606, Part III. Federal taxes 2012 Must You Withdraw or Use Assets? You are not required to take distributions from your Roth IRA at any age. Federal taxes 2012 The minimum distribution rules that apply to traditional IRAs do not apply to Roth IRAs while the owner is alive. Federal taxes 2012 However, after the death of a Roth IRA owner, certain of the minimum distribution rules that apply to traditional IRAs also apply to Roth IRAs as explained later under Distributions After Owner's Death . Federal taxes 2012 Minimum distributions. Federal taxes 2012   You cannot use your Roth IRA to satisfy minimum distribution requirements for your traditional IRA. Federal taxes 2012 Nor can you use distributions from traditional IRAs for required distributions from Roth IRAs. Federal taxes 2012 See Distributions to beneficiaries , later. Federal taxes 2012 Recognizing Losses on Investments If you have a loss on your Roth IRA investment, you can recognize the loss on your income tax return, but only when all the amounts in all of your Roth IRA accounts have been distributed to you and the total distributions are less than your unrecovered basis. Federal taxes 2012 Your basis is the total amount of contributions in your Roth IRAs. Federal taxes 2012 You claim the loss as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions on Schedule A (Form 1040). Federal taxes 2012 Any such losses are added back to taxable income for purposes of calculating the alternative minimum tax. Federal taxes 2012 Distributions After Owner's Death If a Roth IRA owner dies, the minimum distribution rules that apply to traditional IRAs apply to Roth IRAs as though the Roth IRA owner died before his or her required beginning date. Federal taxes 2012 See When Can You Withdraw or Use Assets? in chapter 1. Federal taxes 2012 Distributions to beneficiaries. Federal taxes 2012   Generally, the entire interest in the Roth IRA must be distributed by the end of the fifth calendar year after the year of the owner's death unless the interest is payable to a designated beneficiary over the life or life expectancy of the designated beneficiary. Federal taxes 2012 (See When Must You Withdraw Assets? (Required Minimum Distributions) in chapter 1. Federal taxes 2012 )   If paid as an annuity, the entire interest must be payable over a period not greater than the designated beneficiary's life expectancy and distributions must begin before the end of the calendar year following the year of death. Federal taxes 2012 Distributions from another Roth IRA cannot be substituted for these distributions unless the other Roth IRA was inherited from the same decedent. Federal taxes 2012   If the sole beneficiary is the spouse, he or she can either delay distributions until the decedent would have reached age 70½ or treat the Roth IRA as his or her own. Federal taxes 2012 Combining with other Roth IRAs. Federal taxes 2012   A beneficiary can combine an inherited Roth IRA with another Roth IRA maintained by the beneficiary only if the beneficiary either: Inherited the other Roth IRA from the same decedent, or Was the spouse of the decedent and the sole beneficiary of the Roth IRA and elects to treat it as his or her own IRA. Federal taxes 2012 Distributions that are not qualified distributions. Federal taxes 2012   If a distribution to a beneficiary is not a qualified distribution, it is generally includible in the beneficiary's gross income in the same manner as it would have been included in the owner's income had it been distributed to the IRA owner when he or she was alive. Federal taxes 2012   If the owner of a Roth IRA dies before the end of: The 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for the owner's benefit, or The 5-year period starting with the year of a conversion contribution from a traditional IRA or a rollover from a qualified retirement plan to a Roth IRA, each type of contribution is divided among multiple beneficiaries according to the pro-rata share of each. Federal taxes 2012 See Ordering Rules for Distributions , earlier in this chapter under Are Distributions Taxable. Federal taxes 2012 Example. Federal taxes 2012 When Ms. Federal taxes 2012 Hibbard died in 2013, her Roth IRA contained regular contributions of $4,000, a conversion contribution of $10,000 that was made in 2009, and earnings of $2,000. Federal taxes 2012 No distributions had been made from her IRA. Federal taxes 2012 She had no basis in the conversion contribution in 2009. Federal taxes 2012 When she established this Roth IRA (her first) in 2009, she named each of her four children as equal beneficiaries. Federal taxes 2012 Each child will receive one-fourth of each type of contribution and one-fourth of the earnings. Federal taxes 2012 An immediate distribution of $4,000 to each child will be treated as $1,000 from regular contributions, $2,500 from conversion contributions, and $500 from earnings. Federal taxes 2012 In this case, because the distributions are made before the end of the applicable 5-year period for a qualified distribution, each beneficiary includes $500 in income for 2013. Federal taxes 2012 The 10% additional tax on early distributions does not apply because the distribution was made to the beneficiaries as a result of the death of the IRA owner. Federal taxes 2012 If distributions from an inherited Roth IRA are less than the required minimum distribution for the year, discussed in chapter 1 under When Must You Withdraw Assets? (Required Minimum Distributions), you may have to pay a 50% excise tax for that year on the amount not distributed as required. Federal taxes 2012 For the tax on excess accumulations (insufficient distributions), see Excess Accumulations (Insufficient Distributions) under What Acts Result in Penalties or Additional Taxes? in chapter 1. Federal taxes 2012 If this applies to you, substitute “Roth IRA” for “traditional IRA” in that discussion. Federal taxes 2012 Prev  Up  Next   Home   More Online Publications