ROTH IRA BASIS Question?

Question

In prepararing my 2006 tax return using HR Blocks's TaxCut, one of the error stated, "An amount has been entered in the Taxpayers Roth contribution basis, but the sum of prior year contributions,entered in History of Roth Activites, are less than the contribution basis".

The reason was that I had filled $1000 as Roth IRA contribution in 2005. However, after filing my 2005 taxes, I made another $1000 contribution to my IRA and applied it to the 2005 tax year.

Hence, I actually made $2000 IRA contribution in 2005 as against the $1000 reported in my 2005 tax return.

How do I fix this problem in my 2006 return?

Answer 1

If I understand the problem... you should be able to show $2000 as a contribution for tax year 2006. This should not have an impact unless you qualify for the retirement credit. You cannot claim an IRA deduction after you file your return. The second $1000 was contributed in 2006 after you filed your 2005 return, yes, no

The other point is of course a Roth IRA is not tax deductible.

Answer 2

i'm extremely particular I comprehend your question. transferring funds from one account to a unique instantly isn't a taxable experience. also, it has no longer some thing to do with the theory you've in any IRA (except for wide-spread IRA to a Roth IRA). yet, we are speaking about like expenditures, so as that does no longer prepare. You were meant to document the contributions to any IRA, regardless if it develop into deductible or no longer. also, in spite of the variety of IRA.it truly is the position the IRS will commence together with your foundation interior the account. yet, no matter if you probably did not do this and may instruct your foundation, you nevertheless don't have a lot of a subject matter. to respond to your question...certain you're able to have a deductible loss on an IRA, in spite of what variety. the actual incontrovertible truth that that is a Roth would not make a lot enormous difference. And, as you've reported the completed account at closure should be below the theory you've interior the account (on your case $9,000 at this element). wish this helps.

Answer 3

You CAN'T apply a contribution to a prior tax year unless it is made BEFORE you file your return. This applies even if the contribution is made before the return is due. Next time, if you expect to make an additional contribution, delay filing the return.

Answer 4

To the best of my knowledge, Roth IRAs do NOT get listed for the tax deduction credits, only regular IRAs.
This is not always caught the 1st year and may have significant consequences later . . .

But when in doubt , contact them . . .

http://www.irs.gov/

Answer 5

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Answer 6

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