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Turbotax 2008 Free Edition

2012 1040 FormCan I Efile A 2011 Tax ReturnInstructions For Filing 1040xCan I Efile A 1040xHow To Do An Amended Tax Return2011 Taxact OnlineIrs Forms 1040nrFree Prior Year Tax Filing FreeFile 2012 Taxes Online Free2007 TaxesState Taxes40 Ez FormTurbo Tax For MilitaryHow To Fill Out 1040x Step By Step2011 1040ez Tax Forms And InstructionsIrs Amendment FormAmendFillable Form 1040xAmended Tax FormWhere To File Free State Tax ReturnFile 2009 Taxes Online LateFile State Taxes Only Online FreeMilitary Star CardWww Irs Gov2013 Tax Form 1040xIrs 2011 TaxesFiling 1040x Online FreeAmend Income Tax ReturnWww Irs1040ez ComState Income Tax EfileFree Tax Filing For 2010Irs1040Ammend 2010 Taxes2012 State Income Tax FormsPast Tax FormsFile Past TaxesForm1040xUs Irs Tax Forms1040 X Form2008 Tax Form 1040

Turbotax 2008 Free Edition

Turbotax 2008 free edition Publication 908 - Introductory Material Table of Contents Future Developments What's New Reminders Introduction Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 908, such as legislation enacted after it was published, go to www. Turbotax 2008 free edition irs. Turbotax 2008 free edition gov/pub908. Turbotax 2008 free edition What's New Expiration of provision for catch-up contributions for IRC section 401(k) participants whose employer filed bankruptcy. Turbotax 2008 free edition  The Pension Protection Act of 2006, P. Turbotax 2008 free edition L. Turbotax 2008 free edition 109-280, previously allowed additional contributions of up to $7,000 in a traditional or Roth IRA for employees who participated in an IRC section 401(k) plan of an employer that filed bankruptcy in an earlier year. Turbotax 2008 free edition This provision was not extended for tax years beginning on or after January 1, 2010. Turbotax 2008 free edition Automatic 6-month extension of time to file a bankruptcy estate return now available for individuals in Chapter 7 or 11 bankruptcy. Turbotax 2008 free edition  Beginning June 24, 2011, the IRS clarified in T. Turbotax 2008 free edition D. Turbotax 2008 free edition 9531 that there is available an automatic 6-month extension of time to file a bankruptcy estate income tax return for individuals in Chapter 7 or Chapter 11 bankruptcy proceedings upon filing a required application. Turbotax 2008 free edition The previous extension of time to file a bankruptcy estate return was 5 months. Turbotax 2008 free edition Reminders The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005. Turbotax 2008 free edition  The changes to the U. Turbotax 2008 free edition S. Turbotax 2008 free edition Bankruptcy Code enacted by BAPCA are incorporated throughout this publication. Turbotax 2008 free edition Debtors filing under chapters 7, 11, 12, and 13 of the Bankruptcy Code must file all applicable federal, state, and local tax returns that become due after a case commences. Turbotax 2008 free edition Failure to file tax returns timely or obtain an extension can cause a bankruptcy case to be converted to another chapter or dismissed. Turbotax 2008 free edition In chapter 13 cases, the debtor must file all required tax returns for tax periods ending within 4 years of the filing of the bankruptcy petition. Turbotax 2008 free edition Photographs of missing children. Turbotax 2008 free edition  The IRS is a proud partner with the National Center for Missing and Exploited Children. Turbotax 2008 free edition Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Turbotax 2008 free edition You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Turbotax 2008 free edition Introduction This publication is not intended to cover bankruptcy law in general, or to provide detailed discussions of the tax rules for the more complex corporate bankruptcy reorganizations or other highly technical transactions. Turbotax 2008 free edition Additionally, this publication is not updated on an annual basis and may not reflect recent developments in bankruptcy or tax law. Turbotax 2008 free edition If you need more guidance on the bankruptcy or tax laws applicable to your case, you should seek professional advice. Turbotax 2008 free edition This publication explains the basic federal income tax aspects of bankruptcy. Turbotax 2008 free edition A fundamental goal of the bankruptcy laws enacted by Congress is to give an honest debtor a financial “fresh start”. Turbotax 2008 free edition This is accomplished through the bankruptcy discharge, which is a permanent injunction (court ordered prohibition) against the collection of certain debts as a personal liability of the debtor. Turbotax 2008 free edition Bankruptcy proceedings begin with the filing of either a voluntary petition in the United States Bankruptcy Court, or in certain cases an involuntary petition filed by creditors. Turbotax 2008 free edition This filing creates the bankruptcy estate. Turbotax 2008 free edition The bankruptcy estate generally consists of all of the assets the individual or entity owns on the date the bankruptcy petition was filed. Turbotax 2008 free edition The bankruptcy estate is treated as a separate taxable entity for individuals filing bankruptcy petitions under chapter 7 or 11 of the Bankruptcy Code, discussed later. Turbotax 2008 free edition The tax obligations of taxable bankruptcy estates are discussed later under Individuals in Chapter 7 or 11. Turbotax 2008 free edition Generally, when a debt owed to another person or entity is canceled, the amount canceled or forgiven is considered income that is taxed to the person owing the debt. Turbotax 2008 free edition If a debt is canceled under a bankruptcy proceeding, the amount canceled is not income. Turbotax 2008 free edition However, the canceled debt reduces other tax benefits to which the debtor would otherwise be entitled. Turbotax 2008 free edition See Debt Cancellation, later. Turbotax 2008 free edition Useful Items - You may want to see: Publication 225 Farmer's Tax Guide 525 Taxable and Nontaxable Income 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 538 Accounting Periods and Methods 544 Sales and Other Dispositions of Assets 551 Basis of Assets 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Form (and Instructions) SS-4 Application for Employer Identification Number, and separate instructions 982 Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) 1040 U. Turbotax 2008 free edition S. Turbotax 2008 free edition Individual Income Tax Return, and separate instructions Schedule SE (Form 1040) Self-Employment Tax 1040X Amended U. Turbotax 2008 free edition S. Turbotax 2008 free edition Individual Income Tax Return, and separate instructions 1041 U. Turbotax 2008 free edition S. Turbotax 2008 free edition Income Tax Return for Estates and Trusts, and separate instructions 1041-ES Estimated Income Tax for Estates and Trusts 1041-V Payment Voucher 4506 Request for Copy of Tax Return 4506-T Request for Transcript of Tax Return 4852 Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Turbotax 2008 free edition 4868 Application for Automatic Extension of Time To File U. Turbotax 2008 free edition S. Turbotax 2008 free edition Individual Income Tax Return 7004 Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns See How To Get Tax Help, later, for information about getting these publications and forms. Turbotax 2008 free edition Prev  Up  Next   Home   More Online Publications
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The Turbotax 2008 Free Edition

Turbotax 2008 free edition 17. Turbotax 2008 free edition   Individual Retirement Arrangements (IRAs) Table of Contents What's New Reminders Introduction Useful Items - You may want to see: Traditional IRAsWho Can Open a Traditional IRA? When and How Can a Traditional IRA Be Opened? How Much Can Be Contributed? When Can Contributions Be Made? How Much Can You Deduct? Nondeductible Contributions Inherited IRAs Can You Move Retirement Plan Assets? When Can You Withdraw or Use IRA Assets? When Must You Withdraw IRA Assets? (Required Minimum Distributions) Are Distributions Taxable? What Acts Result in Penalties or Additional Taxes? Roth IRAsWhat Is a Roth IRA? When Can a Roth IRA Be Opened? Can You Contribute to a Roth IRA? Can You Move Amounts Into a Roth IRA? Are Distributions Taxable? What's New Traditional IRA contribution and deduction limit. Turbotax 2008 free edition  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. Turbotax 2008 free edition 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. Turbotax 2008 free edition For more information, see How Much Can Be Contributed? later. Turbotax 2008 free edition Roth IRA contribution limit. Turbotax 2008 free edition  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. Turbotax 2008 free edition 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. Turbotax 2008 free edition However, if your modified adjusted gross income (AGI) is above a certain amount, your contribution limit may be reduced. Turbotax 2008 free edition For more information, see How Much Can Be Contributed? under Can You Contribute to a Roth IRA? later. Turbotax 2008 free edition Modified AGI limit for traditional IRA contributions increased. Turbotax 2008 free edition  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. Turbotax 2008 free edition 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. Turbotax 2008 free edition If your modified AGI is $188,000 or more, you cannot take a deduction for contributions to a traditional IRA. Turbotax 2008 free edition See How Much Can You Deduct , later. Turbotax 2008 free edition Modified AGI limit for Roth IRA contributions increased. Turbotax 2008 free edition  For 2013, your Roth IRA contribution limit is reduced (phased out) in the following situations. Turbotax 2008 free edition Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $178,000. Turbotax 2008 free edition You cannot make a Roth IRA contribution if your modified AGI is $188,000 or more. Turbotax 2008 free edition 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. Turbotax 2008 free edition You cannot make a Roth IRA contribution if your modified AGI is $127,000 or more. Turbotax 2008 free edition 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-. Turbotax 2008 free edition You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. Turbotax 2008 free edition See Can You Contribute to a Roth IRA , later. Turbotax 2008 free edition Net Investment Income Tax. Turbotax 2008 free edition   For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan including IRAs (for example; 401(a), 403(a), 403(b), 408, 408A, or 457(b) plans). Turbotax 2008 free edition However, these distributions are taken into account when determining the modified adjusted gross income threshold. Turbotax 2008 free edition Distributions from a nonqualified retirement plan are included in net investment income. Turbotax 2008 free edition See Form 8960, Net Investment Income Tax - Individuals, Estates, and Trusts, and its instructions for more information. Turbotax 2008 free edition Name change. Turbotax 2008 free edition  All spousal IRAs have been renamed Kay Bailey Hutchison Spousal IRAs. Turbotax 2008 free edition There are no changes to the rules regarding these IRAs. Turbotax 2008 free edition See Kay Bailey Hutchison Spousal IRA Limit , later, for more information. Turbotax 2008 free edition Reminders 2014 limits. Turbotax 2008 free edition   You can find information about the 2014 contribution and AGI limits in Publication 590. Turbotax 2008 free edition Contributions to both traditional and Roth IRAs. Turbotax 2008 free edition   For information on your combined contribution limit if you contribute to both traditional and Roth IRAs, see Roth IRAs and traditional IRAs under How Much Can Be Contributed? in Roth IRAs, later. Turbotax 2008 free edition Statement of required minimum distribution. Turbotax 2008 free edition  If a minimum distribution from your IRA is required, the trustee, custodian, or issuer that held the IRA at the end of the preceding year must either report the amount of the required minimum distribution to you, or offer to calculate it for you. Turbotax 2008 free edition The report or offer must include the date by which the amount must be distributed. Turbotax 2008 free edition The report is due January 31 of the year in which the minimum distribution is required. Turbotax 2008 free edition It can be provided with the year-end fair market value statement that you normally get each year. Turbotax 2008 free edition No report is required for IRAs of owners who have died. Turbotax 2008 free edition IRA interest. Turbotax 2008 free edition  Although interest earned from your IRA is generally not taxed in the year earned, it is not tax-exempt interest. Turbotax 2008 free edition Tax on your traditional IRA is generally deferred until you take a distribution. Turbotax 2008 free edition Do not report this interest on your tax return as tax-exempt interest. Turbotax 2008 free edition Form 8606. Turbotax 2008 free edition   To designate contributions as nondeductible, you must file Form 8606, Nondeductible IRAs. Turbotax 2008 free edition The term “50 or older” is used several times in this chapter. Turbotax 2008 free edition It refers to an IRA owner who is age 50 or older by the end of the tax year. Turbotax 2008 free edition Introduction An individual retirement arrangement (IRA) is a personal savings plan that gives you tax advantages for setting aside money for your retirement. Turbotax 2008 free edition This chapter discusses the following topics. Turbotax 2008 free edition The rules for a traditional IRA (any IRA that is not a Roth or SIMPLE IRA). Turbotax 2008 free edition The Roth IRA, which features nondeductible contributions and tax-free distributions. Turbotax 2008 free edition Simplified Employee Pensions (SEPs) and Savings Incentive Match Plans for Employees (SIMPLEs) are not discussed in this chapter. Turbotax 2008 free edition For more information on these plans and employees' SEP IRAs and SIMPLE IRAs that are part of these plans, see Publications 560 and 590. Turbotax 2008 free edition For information about contributions, deductions, withdrawals, transfers, rollovers, and other transactions, see Publication 590. Turbotax 2008 free edition Useful Items - You may want to see: Publication 560 Retirement Plans for Small Business 590 Individual Retirement Arrangements (IRAs) Form (and Instructions) 5329 Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts 8606 Nondeductible IRAs Traditional IRAs In this chapter, the original IRA (sometimes called an ordinary or regular IRA) is referred to as a “traditional IRA. Turbotax 2008 free edition ” A traditional IRA is any IRA that is not a Roth IRA or a SIMPLE IRA. Turbotax 2008 free edition Two advantages of a traditional IRA are: You may be able to deduct some or all of your contributions to it, depending on your circumstances, and Generally, amounts in your IRA, including earnings and gains, are not taxed until they are distributed. Turbotax 2008 free edition 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. Turbotax 2008 free edition What is compensation?   Generally, compensation is what you earn from working. Turbotax 2008 free edition Compensation includes wages, salaries, tips, professional fees, bonuses, and other amounts you receive for providing personal services. Turbotax 2008 free edition 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). Turbotax 2008 free edition   Scholarship and fellowship payments are compensation for this purpose only if shown in box 1 of Form W-2. Turbotax 2008 free edition   Compensation also includes commissions and taxable alimony and separate maintenance payments. Turbotax 2008 free edition Self-employment income. Turbotax 2008 free edition   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 deductible part of your self-employment tax. Turbotax 2008 free edition   Compensation includes earnings from self-employment even if they are not subject to self-employment tax because of your religious beliefs. Turbotax 2008 free edition Nontaxable combat pay. Turbotax 2008 free edition   For IRA purposes, if you were a member of the U. Turbotax 2008 free edition S. Turbotax 2008 free edition Armed Forces, your compensation includes any nontaxable combat pay you receive. Turbotax 2008 free edition What is not compensation?   Compensation does not include any of the following items. Turbotax 2008 free edition Earnings and profits from property, such as rental income, interest income, and dividend income. Turbotax 2008 free edition Pension or annuity income. Turbotax 2008 free edition Deferred compensation received (compensation payments postponed from a past year). Turbotax 2008 free edition Income from a partnership for which you do not provide services that are a material income-producing factor. Turbotax 2008 free edition Conservation Reserve Program (CRP) payments reported on Schedule SE (Form 1040), line 1b. Turbotax 2008 free edition Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs. Turbotax 2008 free edition When and How Can a Traditional IRA Be Opened? You can open a traditional IRA at any time. Turbotax 2008 free edition However, the time for making contributions for any year is limited. Turbotax 2008 free edition See When Can Contributions Be Made , later. Turbotax 2008 free edition You can open different kinds of IRAs with a variety of organizations. Turbotax 2008 free edition You can open an IRA at a bank or other financial institution or with a mutual fund or life insurance company. Turbotax 2008 free edition You can also open an IRA through your stockbroker. Turbotax 2008 free edition Any IRA must meet Internal Revenue Code requirements. Turbotax 2008 free edition Kinds of traditional IRAs. Turbotax 2008 free edition   Your traditional IRA can be an individual retirement account or annuity. Turbotax 2008 free edition It can be part of either a simplified employee pension (SEP) or an employer or employee association trust account. Turbotax 2008 free edition How Much Can Be Contributed? There are limits and other rules that affect the amount that can be contributed to a traditional IRA. Turbotax 2008 free edition These limits and other rules are explained below. Turbotax 2008 free edition Community property laws. Turbotax 2008 free edition   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. Turbotax 2008 free edition This is the rule even in states with community property laws. Turbotax 2008 free edition Brokers' commissions. Turbotax 2008 free edition   Brokers' commissions paid in connection with your traditional IRA are subject to the contribution limit. Turbotax 2008 free edition Trustees' fees. Turbotax 2008 free edition   Trustees' administrative fees are not subject to the contribution limit. Turbotax 2008 free edition Qualified reservist repayments. Turbotax 2008 free edition   If you are (or 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 you received. Turbotax 2008 free edition 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. Turbotax 2008 free edition 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 similar arrangement. Turbotax 2008 free edition   For more information, see Qualified reservist repayments under How Much Can Be Contributed? in chapter 1 of Publication 590. Turbotax 2008 free edition Contributions on your behalf to a traditional IRA reduce your limit for contributions to a Roth IRA. Turbotax 2008 free edition (See Roth IRAs, later. Turbotax 2008 free edition ) General limit. Turbotax 2008 free edition   For 2013, the most that can be contributed to your traditional IRA generally is the smaller of the following amounts. Turbotax 2008 free edition $5,500 ($6,500 if you are 50 or older). Turbotax 2008 free edition Your taxable compensation (defined earlier) for the year. Turbotax 2008 free edition 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. Turbotax 2008 free edition (See Nondeductible Contributions , later. Turbotax 2008 free edition ) Qualified reservist repayments do not affect this limit. Turbotax 2008 free edition Example 1. Turbotax 2008 free edition Betty, who is 34 years old and single, earned $24,000 in 2013. Turbotax 2008 free edition Her IRA contributions for 2013 are limited to $5,500. Turbotax 2008 free edition Example 2. Turbotax 2008 free edition John, an unmarried college student working part time, earned $3,500 in 2013. Turbotax 2008 free edition His IRA contributions for 2013 are limited to $3,500, the amount of his compensation. Turbotax 2008 free edition Kay Bailey Hutchison Spousal IRA limit. Turbotax 2008 free edition   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 amounts. Turbotax 2008 free edition $5,500 ($6,500 if you are 50 or older). Turbotax 2008 free edition The total compensation includible in the gross income of both you and your spouse for the year, reduced by the following two amounts. Turbotax 2008 free edition Your spouse's IRA contribution for the year to a traditional IRA. Turbotax 2008 free edition Any contribution for the year to a Roth IRA on behalf of your spouse. Turbotax 2008 free edition 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 50 or older, or $13,000 if both of you are 50 or older). Turbotax 2008 free edition 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). Turbotax 2008 free edition Contributions must be in the form of money (cash, check, or money order). Turbotax 2008 free edition Property cannot be contributed. Turbotax 2008 free edition Contributions must be made by due date. Turbotax 2008 free edition   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. Turbotax 2008 free edition Age 70½ rule. Turbotax 2008 free edition   Contributions cannot be made to your traditional IRA for the year in which you reach age 70½ or for any later year. Turbotax 2008 free edition   You attain age 70½ on the date that is 6 calendar months after the 70th anniversary of your birth. Turbotax 2008 free edition If you were born on or before June 30, 1943, you cannot contribute for 2013 or any later year. Turbotax 2008 free edition Designating year for which contribution is made. Turbotax 2008 free edition   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. Turbotax 2008 free edition 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). Turbotax 2008 free edition Filing before a contribution is made. Turbotax 2008 free edition   You can file your return claiming a traditional IRA contribution before the contribution is actually made. Turbotax 2008 free edition Generally, the contribution must be made by the due date of your return, not including extensions. Turbotax 2008 free edition Contributions not required. Turbotax 2008 free edition   You do not have to contribute to your traditional IRA for every tax year, even if you can. Turbotax 2008 free edition 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 it applies). Turbotax 2008 free edition However, if you or your spouse was covered by an employer retirement plan, you may not be able to deduct this amount. Turbotax 2008 free edition See Limit If Covered by Employer Plan , later. Turbotax 2008 free edition You may be able to claim a credit for contributions to your traditional IRA. Turbotax 2008 free edition For more information, see chapter 37. Turbotax 2008 free edition Trustees' fees. Turbotax 2008 free edition   Trustees' administrative fees that are billed separately and paid in connection with your traditional IRA are not deductible as IRA contributions. Turbotax 2008 free edition However, they may be deductible as a miscellaneous itemized deduction on Schedule A (Form 1040). Turbotax 2008 free edition See chapter 28. Turbotax 2008 free edition Brokers' commissions. Turbotax 2008 free edition   Brokers' commissions are part of your IRA contribution and, as such, are deductible subject to the limits. Turbotax 2008 free edition Full deduction. Turbotax 2008 free edition   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 traditional IRAs of up to the lesser of: $5,500 ($6,500 if you are age 50 or older in 2013). Turbotax 2008 free edition 100% of your compensation. Turbotax 2008 free edition This limit is reduced by any contributions made to a 501(c)(18) plan on your behalf. Turbotax 2008 free edition Kay Bailey Hutchison Spousal IRA. Turbotax 2008 free edition   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 the following amounts. Turbotax 2008 free edition $5,500 ($6,500 if the spouse with the lower compensation is age 50 or older in 2013). Turbotax 2008 free edition The total compensation includible in the gross income of both spouses for the year reduced by the following three amounts. Turbotax 2008 free edition The IRA deduction for the year of the spouse with the greater compensation. Turbotax 2008 free edition Any designated nondeductible contribution for the year made on behalf of the spouse with the greater compensation. Turbotax 2008 free edition Any contributions for the year to a Roth IRA on behalf of the spouse with the greater compensation. Turbotax 2008 free edition This limit is reduced by any contributions to a 501(c)(18) plan on behalf of the spouse with the lesser compensation. Turbotax 2008 free edition Note. Turbotax 2008 free edition 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. Turbotax 2008 free edition After a divorce or legal separation, you can deduct only contributions to your own IRA. Turbotax 2008 free edition Your deductions are subject to the rules for single individuals. Turbotax 2008 free edition Covered by an employer retirement plan. Turbotax 2008 free edition   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. Turbotax 2008 free edition This is discussed later under Limit If Covered by Employer Plan . Turbotax 2008 free edition Limits on the amount you can deduct do not affect the amount that can be contributed. Turbotax 2008 free edition See Nondeductible Contributions , later. Turbotax 2008 free edition 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. Turbotax 2008 free edition The “Retirement plan” box should be checked if you were covered. Turbotax 2008 free edition Reservists and volunteer firefighters should also see Situations in Which You Are Not Covered by an Employer Plan , later. Turbotax 2008 free edition If you are not certain whether you were covered by your employer's retirement plan, you should ask your employer. Turbotax 2008 free edition Federal judges. Turbotax 2008 free edition   For purposes of the IRA deduction, federal judges are covered by an employer retirement plan. Turbotax 2008 free edition For Which Year(s) Are You Covered by an Employer Plan? Special rules apply to determine the tax years for which you are covered by an employer plan. Turbotax 2008 free edition These rules differ depending on whether the plan is a defined contribution plan or a defined benefit plan. Turbotax 2008 free edition Tax year. Turbotax 2008 free edition   Your tax year is the annual accounting period you use to keep records and report income and expenses on your income tax return. Turbotax 2008 free edition For almost all people, the tax year is the calendar year. Turbotax 2008 free edition Defined contribution plan. Turbotax 2008 free edition   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. Turbotax 2008 free edition   A defined contribution plan is a plan that provides for a separate account for each person covered by the plan. Turbotax 2008 free edition Types of defined contribution plans include profit-sharing plans, stock bonus plans, and money purchase pension plans. Turbotax 2008 free edition Defined benefit plan. Turbotax 2008 free edition   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. Turbotax 2008 free edition 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. Turbotax 2008 free edition   A defined benefit plan is any plan that is not a defined contribution plan. Turbotax 2008 free edition Defined benefit plans include pension plans and annuity plans. Turbotax 2008 free edition No vested interest. Turbotax 2008 free edition   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. Turbotax 2008 free edition Situations in Which You Are Not Covered by an Employer Plan Unless you are covered under another employer plan, you are not covered by an employer plan if you are in one of the situations described below. Turbotax 2008 free edition Social security or railroad retirement. Turbotax 2008 free edition   Coverage under social security or railroad retirement is not coverage under an employer retirement plan. Turbotax 2008 free edition Benefits from a previous employer's plan. Turbotax 2008 free edition   If you receive retirement benefits from a previous employer's plan, you are not covered by that plan. Turbotax 2008 free edition Reservists. Turbotax 2008 free edition   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. Turbotax 2008 free edition You are not covered by the plan if both of the following conditions are met. Turbotax 2008 free edition 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. Turbotax 2008 free edition You did not serve more than 90 days on active duty during the year (not counting duty for training). Turbotax 2008 free edition Volunteer firefighters. Turbotax 2008 free edition   If the only reason you participate in a plan is because you are a volunteer firefighter, you may not be covered by the plan. Turbotax 2008 free edition You are not covered by the plan if both of the following conditions are met. Turbotax 2008 free edition 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. Turbotax 2008 free edition Your accrued retirement benefits at the beginning of the year will not provide more than $1,800 per year at retirement. Turbotax 2008 free edition Limit If Covered by Employer Plan 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. Turbotax 2008 free edition 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. Turbotax 2008 free edition These amounts vary depending on your filing status. Turbotax 2008 free edition To determine if your deduction is subject to phaseout, you must determine your modified adjusted gross income (AGI) and your filing status. Turbotax 2008 free edition See Filing status and Modified adjusted gross income (AGI) , later. Turbotax 2008 free edition Then use Table 17-1 or 17-2 to determine if the phaseout applies. Turbotax 2008 free edition Social security recipients. Turbotax 2008 free edition   Instead of using Table 17-1 or Table 17-2, use the worksheets in Appendix B of Publication 590 if, for the year, all of the following apply. Turbotax 2008 free edition You received social security benefits. Turbotax 2008 free edition You received taxable compensation. Turbotax 2008 free edition Contributions were made to your traditional IRA. Turbotax 2008 free edition You or your spouse was covered by an employer retirement plan. Turbotax 2008 free edition Use those worksheets to figure your IRA deduction, your nondeductible contribution, and the taxable portion, if any, of your social security benefits. Turbotax 2008 free edition Deduction phaseout. Turbotax 2008 free edition   If you were 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 17-1. Turbotax 2008 free edition Table 17-1. Turbotax 2008 free edition Effect of Modified AGI1 on Deduction if You Are Covered by 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. Turbotax 2008 free edition IF your filing status is. Turbotax 2008 free edition . Turbotax 2008 free edition . Turbotax 2008 free edition   AND your modified AGI is. Turbotax 2008 free edition . Turbotax 2008 free edition . Turbotax 2008 free edition   THEN you can take. Turbotax 2008 free edition . Turbotax 2008 free edition . Turbotax 2008 free edition single   or  head of household   $59,000 or less   a full deduction. Turbotax 2008 free edition   more than $59,000 but less than $69,000   a partial deduction. Turbotax 2008 free edition   $69,000 or more   no deduction. Turbotax 2008 free edition married filing jointly   or  qualifying widow(er)   $95,000 or less   a full deduction. Turbotax 2008 free edition   more than $95,000 but less than $115,000   a partial deduction. Turbotax 2008 free edition   $115,000 or more   no deduction. Turbotax 2008 free edition married filing separately2   less than $10,000   a partial deduction. Turbotax 2008 free edition   $10,000 or more   no deduction. Turbotax 2008 free edition 1Modified AGI (adjusted gross income). Turbotax 2008 free edition See Modified adjusted gross income (AGI) . Turbotax 2008 free edition 2If 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” column). Turbotax 2008 free edition If your spouse is covered. Turbotax 2008 free edition   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 17-2. Turbotax 2008 free edition Filing status. Turbotax 2008 free edition   Your filing status depends primarily on your marital status. Turbotax 2008 free edition 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. Turbotax 2008 free edition If you need more information on filing status, see chapter 2. Turbotax 2008 free edition Lived apart from spouse. Turbotax 2008 free edition   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. Turbotax 2008 free edition Table 17-2. Turbotax 2008 free edition Effect of Modified AGI1 on Deduction if You Are NOT Covered by 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. Turbotax 2008 free edition IF your filing status is. Turbotax 2008 free edition . Turbotax 2008 free edition . Turbotax 2008 free edition   AND your modified AGI is. Turbotax 2008 free edition . Turbotax 2008 free edition . Turbotax 2008 free edition   THEN you can take. Turbotax 2008 free edition . Turbotax 2008 free edition . Turbotax 2008 free edition single, head of household, or qualifying widow(er)   any amount   a full deduction. Turbotax 2008 free edition married filing jointly or separately with a spouse who is not covered by a plan at work   any amount   a full deduction. Turbotax 2008 free edition married filing jointly with a spouse who is covered by a plan at work   $178,000 or less   a full deduction. Turbotax 2008 free edition   more than $178,000 but less than $188,000   a partial deduction. Turbotax 2008 free edition   $188,000 or more   no deduction. Turbotax 2008 free edition married filing separately with a spouse who is covered by a plan at work2   less than $10,000   a partial deduction. Turbotax 2008 free edition   $10,000 or more   no deduction. Turbotax 2008 free edition 1Modified AGI (adjusted gross income). Turbotax 2008 free edition See Modified adjusted gross income (AGI) . Turbotax 2008 free edition 2You are entitled to the full deduction if you did not live with your spouse at any time during the year. Turbotax 2008 free edition Modified adjusted gross income (AGI). Turbotax 2008 free edition   How you figure your modified AGI depends on whether you are filing Form 1040 or Form 1040A. Turbotax 2008 free edition If you made contributions to your IRA for 2013 and received a distribution from your IRA in 2013, see Publication 590. Turbotax 2008 free edition You may be able to use Worksheet 17-1 to figure your modified AGI. Turbotax 2008 free edition    Do not assume that your modified AGI is the same as your compensation. Turbotax 2008 free edition Your modified AGI may include income in addition to your compensation (discussed earlier), such as interest, dividends, and income from IRA distributions. Turbotax 2008 free edition Form 1040. Turbotax 2008 free edition   If you file Form 1040, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following eight amounts. Turbotax 2008 free edition IRA deduction. Turbotax 2008 free edition Student loan interest deduction. Turbotax 2008 free edition Tuition and fees deduction. Turbotax 2008 free edition Domestic production activities deduction. Turbotax 2008 free edition Foreign earned income exclusion. Turbotax 2008 free edition Foreign housing exclusion or deduction. Turbotax 2008 free edition Exclusion of qualified savings bond interest shown on Form 8815, Exclusion of Interest From Series EE and I U. Turbotax 2008 free edition S. Turbotax 2008 free edition Savings Bonds Issued After 1989. Turbotax 2008 free edition Exclusion of employer-provided adoption benefits shown on Form 8839, Qualified Adoption Expenses. Turbotax 2008 free edition This is your modified AGI. Turbotax 2008 free edition Form 1040A. Turbotax 2008 free edition   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. Turbotax 2008 free edition IRA deduction. Turbotax 2008 free edition Student loan interest deduction. Turbotax 2008 free edition Tuition and fees deduction. Turbotax 2008 free edition Exclusion of qualified savings bond interest shown on Form 8815. Turbotax 2008 free edition This is your modified AGI. Turbotax 2008 free edition Both contributions for 2013 and distributions in 2013. Turbotax 2008 free edition   If all three of the following apply, any IRA distributions you received in 2013 may be partly tax free and partly taxable. Turbotax 2008 free edition You received distributions in 2013 from one or more traditional IRAs. Turbotax 2008 free edition You made contributions to a traditional IRA for 2013. Turbotax 2008 free edition Some of those contributions may be nondeductible contributions. Turbotax 2008 free edition If this is your situation, you must figure the taxable part of the traditional IRA distribution before you can figure your modified AGI. Turbotax 2008 free edition To do this, you can use Worksheet 1-5, Figuring the Taxable Part of Your IRA Distribution, in Publication 590. Turbotax 2008 free edition   If at least one of the above does not apply, figure your modified AGI using Worksheet 17-1, later. Turbotax 2008 free edition    How to figure your reduced IRA deduction. Turbotax 2008 free edition   You can figure your reduced IRA deduction for either Form 1040 or Form 1040A by using the worksheets in chapter 1 of Publication 590. Turbotax 2008 free edition Also, the instructions for Form 1040 and Form 1040A include similar worksheets that you may be able to use instead. Turbotax 2008 free edition Worksheet 17-1. Turbotax 2008 free edition Figuring Your Modified AGI Use this worksheet to figure your modified adjusted gross income for traditional IRA purposes. Turbotax 2008 free edition 1. Turbotax 2008 free edition Enter your adjusted gross income (AGI) from Form 1040, line 38, or Form 1040A, line 22, figured without taking into account the amount from Form 1040, line 32, or Form 1040A, line 17 1. Turbotax 2008 free edition   2. Turbotax 2008 free edition Enter any student loan interest deduction from Form 1040, line 33, or Form 1040A, line 18 2. Turbotax 2008 free edition   3. Turbotax 2008 free edition Enter any tuition and fees deduction from Form 1040, line 34, or Form 1040A, line 19 3. Turbotax 2008 free edition   4. Turbotax 2008 free edition Enter any domestic production activities deduction from Form 1040, line 35 4. Turbotax 2008 free edition   5. Turbotax 2008 free edition Enter any foreign earned income and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18 5. Turbotax 2008 free edition   6. Turbotax 2008 free edition Enter any foreign housing deduction from Form 2555, line 50 6. Turbotax 2008 free edition   7. Turbotax 2008 free edition Enter any excludable savings bond interest from Form 8815, line 14 7. Turbotax 2008 free edition   8. Turbotax 2008 free edition Enter any excluded employer-provided adoption benefits from Form 8839, line 28 8. Turbotax 2008 free edition   9. Turbotax 2008 free edition Add lines 1 through 8. Turbotax 2008 free edition This is your Modified AGI for traditional IRA purposes 9. Turbotax 2008 free edition   Reporting Deductible Contributions If you file Form 1040, enter your IRA deduction on line 32 of that form. Turbotax 2008 free edition If you file Form 1040A, enter your IRA deduction on line 17. Turbotax 2008 free edition You cannot deduct IRA contributions on Form 1040EZ. Turbotax 2008 free edition Nondeductible Contributions Although your deduction for IRA contributions may be reduced or eliminated, contributions can be made to your IRA up to the general limit or, if it applies, the Kay Bailey Hutchison Spousal IRA limit. Turbotax 2008 free edition The difference between your total permitted contributions and your IRA deduction, if any, is your nondeductible contribution. Turbotax 2008 free edition Example. Turbotax 2008 free edition Mike is 28 years old and single. Turbotax 2008 free edition In 2013, he was covered by a retirement plan at work. Turbotax 2008 free edition His salary was $57,312. Turbotax 2008 free edition His modified AGI was $70,000. Turbotax 2008 free edition Mike made a $5,500 IRA contribution for 2013. Turbotax 2008 free edition Because he was covered by a retirement plan and his modified AGI was over $69,000, he cannot deduct his $5,500 IRA contribution. Turbotax 2008 free edition He must designate this contribution as a nondeductible contribution by reporting it on Form 8606, as explained next. Turbotax 2008 free edition Form 8606. Turbotax 2008 free edition   To designate contributions as nondeductible, you must file Form 8606. Turbotax 2008 free edition   You do not have to designate a contribution as nondeductible until you file your tax return. Turbotax 2008 free edition When you file, you can even designate otherwise deductible contributions as nondeductible. Turbotax 2008 free edition   You must file Form 8606 to report nondeductible contributions even if you do not have to file a tax return for the year. Turbotax 2008 free edition 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. Turbotax 2008 free edition In those situations, a Form 8606 is completed for the year you take a distribution from that IRA. Turbotax 2008 free edition See Form 8606 under Distributions Fully or Partly Taxable, later. Turbotax 2008 free edition Failure to report nondeductible contributions. Turbotax 2008 free edition   If you do not report nondeductible contributions, all of the contributions to your traditional IRA will be treated as deductible contributions when withdrawn. Turbotax 2008 free edition All distributions from your IRA will be taxed unless you can show, with satisfactory evidence, that nondeductible contributions were made. Turbotax 2008 free edition Penalty for overstatement. Turbotax 2008 free edition   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. Turbotax 2008 free edition Penalty for failure to file Form 8606. Turbotax 2008 free edition   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. Turbotax 2008 free edition    Tax on earnings on nondeductible contributions. Turbotax 2008 free edition   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. Turbotax 2008 free edition See When Can You Withdraw or Use IRA Assets , later. Turbotax 2008 free edition Cost basis. Turbotax 2008 free edition   You will have a cost basis in your traditional IRA if you made any nondeductible contributions. Turbotax 2008 free edition Your cost basis is the sum of the nondeductible contributions to your IRA minus any withdrawals or distributions of nondeductible contributions. Turbotax 2008 free edition Inherited IRAs If you inherit a traditional IRA, you are called a beneficiary. Turbotax 2008 free edition A beneficiary can be any person or entity the owner chooses to receive the benefits of the IRA after he or she dies. Turbotax 2008 free edition Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive. Turbotax 2008 free edition Inherited from spouse. Turbotax 2008 free edition   If you inherit a traditional IRA from your spouse, you generally have the following three choices. Turbotax 2008 free edition You can: Treat it as your own IRA by designating yourself as the account owner. Turbotax 2008 free edition 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 (section 403(b) plan), or Deferred compensation plan of a state or local government (section 457 plan). Turbotax 2008 free edition Treat yourself as the beneficiary rather than treating the IRA as your own. Turbotax 2008 free edition Treating it as your own. Turbotax 2008 free edition   You will be considered to have chosen to treat the IRA as your own if: Contributions (including rollover contributions) are made to the inherited IRA, or You do not take the required minimum distribution for a year as a beneficiary of the IRA. Turbotax 2008 free edition You will only be considered to have chosen to treat the IRA as your own if: You are the sole beneficiary of the IRA, and You have an unlimited right to withdraw amounts from it. Turbotax 2008 free edition   However, if you receive a distribution from your deceased spouse's IRA, you can roll that distribution over into your own IRA within the 60-day time limit, as long as the distribution is not a required distribution, even if you are not the sole beneficiary of your deceased spouse's IRA. Turbotax 2008 free edition Inherited from someone other than spouse. Turbotax 2008 free edition   If you inherit a traditional IRA from anyone other than your deceased spouse, you cannot treat the inherited IRA as your own. Turbotax 2008 free edition This means that you cannot make any contributions to the IRA. Turbotax 2008 free edition It also means you cannot roll over any amounts into or out of the inherited IRA. Turbotax 2008 free edition However, you can make a trustee-to-trustee transfer as long as the IRA into which amounts are being moved is set up and maintained in the name of the deceased IRA owner for the benefit of you as beneficiary. Turbotax 2008 free edition For more information, see the discussion of inherited IRAs under Rollover From One IRA Into Another, later. Turbotax 2008 free edition Can You Move Retirement Plan Assets? You can transfer, tax free, assets (money or property) from other retirement plans (including traditional IRAs) to a traditional IRA. Turbotax 2008 free edition You can make the following kinds of transfers. Turbotax 2008 free edition Transfers from one trustee to another. Turbotax 2008 free edition Rollovers. Turbotax 2008 free edition Transfers incident to a divorce. Turbotax 2008 free edition Transfers to Roth IRAs. Turbotax 2008 free edition   Under certain conditions, you can move assets from a traditional IRA or from a designated Roth account to a Roth IRA. Turbotax 2008 free edition You can also move assets from a qualified retirement plan to a Roth IRA. Turbotax 2008 free edition See Can You Move Amounts Into a Roth IRA? under Roth IRAs, later. Turbotax 2008 free edition Trustee-to-Trustee Transfer A transfer of funds in your traditional IRA from one trustee directly to another, either at your request or at the trustee's request, is not a rollover. Turbotax 2008 free edition Because there is no distribution to you, the transfer is tax free. Turbotax 2008 free edition Because it is not a rollover, it is not affected by the 1-year waiting period required between rollovers, discussed later under Rollover From One IRA Into Another . Turbotax 2008 free edition For information about direct transfers to IRAs from retirement plans other than IRAs, see Can You Move Retirement Plan Assets? in chapter 1 and Can You Move Amounts Into a Roth IRA? in chapter 2 of Publication 590. Turbotax 2008 free edition Rollovers Generally, a rollover is a tax-free distribution to you of cash or other assets from one retirement plan that you contribute (roll over) to another retirement plan. Turbotax 2008 free edition The contribution to the second retirement plan is called a “rollover contribution. Turbotax 2008 free edition ” Note. Turbotax 2008 free edition An amount rolled over tax free from one retirement plan to another is generally includible in income when it is distributed from the second plan. Turbotax 2008 free edition Kinds of rollovers to a traditional IRA. Turbotax 2008 free edition   You can roll over amounts from the following plans into a traditional IRA: A traditional IRA, An employer's qualified retirement plan for its employees, A deferred compensation plan of a state or local government (section 457 plan), or A tax-sheltered annuity plan (section 403(b) plan). Turbotax 2008 free edition Treatment of rollovers. Turbotax 2008 free edition   You cannot deduct a rollover contribution, but you must report the rollover distribution on your tax return as discussed later under Reporting rollovers from IRAs and under Reporting rollovers from employer plans . Turbotax 2008 free edition Kinds of rollovers from a traditional IRA. Turbotax 2008 free edition   You may be able to roll over, tax free, a distribution from your traditional IRA into a qualified plan. Turbotax 2008 free edition These plans include the federal Thrift Savings Fund (for federal employees), deferred compensation plans of state or local governments (section 457 plans), and tax-sheltered annuity plans (section 403(b) plans). Turbotax 2008 free edition The part of the distribution that you can roll over is the part that would otherwise be taxable (includible in your income). Turbotax 2008 free edition Qualified plans may, but are not required to, accept such rollovers. Turbotax 2008 free edition Time limit for making a rollover contribution. Turbotax 2008 free edition   You generally must make the rollover contribution by the 60th day after the day you receive the distribution from your traditional IRA or your employer's plan. Turbotax 2008 free edition The IRS may waive the 60-day requirement where the failure to do so would be against equity or good conscience, such as in the event of a casualty, disaster, or other event beyond your reasonable control. Turbotax 2008 free edition For more information, see Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Turbotax 2008 free edition Extension of rollover period. Turbotax 2008 free edition   If an amount distributed to you from a traditional IRA or a qualified employer retirement plan is a frozen deposit at any time during the 60-day period allowed for a rollover, special rules extend the rollover period. Turbotax 2008 free edition For more information, see Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Turbotax 2008 free edition More information. Turbotax 2008 free edition   For more information on rollovers, see Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Turbotax 2008 free edition Rollover From One IRA Into Another You can withdraw, tax free, all or part of the assets from one traditional IRA if you reinvest them within 60 days in the same or another traditional IRA. Turbotax 2008 free edition Because this is a rollover, you cannot deduct the amount that you reinvest in an IRA. Turbotax 2008 free edition Waiting period between rollovers. Turbotax 2008 free edition   Generally, if you make a tax-free rollover of any part of a distribution from a traditional IRA, you cannot, within a 1-year period, make a tax-free rollover of any later distribution from that same IRA. Turbotax 2008 free edition You also cannot make a tax-free rollover of any amount distributed, within the same 1-year period, from the IRA into which you made the tax-free rollover. Turbotax 2008 free edition   The 1-year period begins on the date you receive the IRA distribution, not on the date you roll it over into an IRA. Turbotax 2008 free edition Example. Turbotax 2008 free edition You have two traditional IRAs, IRA-1 and IRA-2. Turbotax 2008 free edition You make a tax-free rollover of a distribution from IRA-1 into a new traditional IRA (IRA-3). Turbotax 2008 free edition You cannot, within 1 year of the distribution from IRA-1, make a tax-free rollover of any distribution from either IRA-1 or IRA-3 into another traditional IRA. Turbotax 2008 free edition However, the rollover from IRA-1 into IRA-3 does not prevent you from making a tax-free rollover from IRA-2 into any other traditional IRA. Turbotax 2008 free edition This is because you have not, within the last year, rolled over, tax free, any distribution from IRA-2 or made a tax-free rollover into IRA-2. Turbotax 2008 free edition Exception. Turbotax 2008 free edition   For an exception for distributions from failed financial institutions, see Rollover From One IRA Into Another under Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Turbotax 2008 free edition Partial rollovers. Turbotax 2008 free edition   If you withdraw assets from a traditional IRA, you can roll over part of the withdrawal tax free and keep the rest of it. Turbotax 2008 free edition The amount you keep will generally be taxable (except for the part that is a return of nondeductible contributions). Turbotax 2008 free edition The amount you keep may be subject to the 10% additional tax on early distributions, discussed later under What Acts Result in Penalties or Additional Taxes? . Turbotax 2008 free edition Required distributions. Turbotax 2008 free edition   Amounts that must be distributed during a particular year under the required distribution rules (discussed later) are not eligible for rollover treatment. Turbotax 2008 free edition Inherited IRAs. Turbotax 2008 free edition   If you inherit a traditional IRA from your spouse, you generally can roll it over, or you can choose to make the inherited IRA your own. Turbotax 2008 free edition See Treating it as your own , earlier. Turbotax 2008 free edition Not inherited from spouse. Turbotax 2008 free edition   If you inherit a traditional IRA from someone other than your spouse, you cannot roll it over or allow it to receive a rollover contribution. Turbotax 2008 free edition You must withdraw the IRA assets within a certain period. Turbotax 2008 free edition For more information, see When Must You Withdraw Assets? in chapter 1 of Publication 590. Turbotax 2008 free edition Reporting rollovers from IRAs. Turbotax 2008 free edition   Report any rollover from one traditional IRA to the same or another traditional IRA on lines 15a and 15b, Form 1040, or lines 11a and 11b, Form 1040A, as follows. Turbotax 2008 free edition   Enter the total amount of the distribution on Form 1040, line 15a, or Form 1040A, line 11a. Turbotax 2008 free edition If the total amount on Form 1040, line 15a, or Form 1040A, line 11a, was rolled over, enter zero on Form 1040, line 15b, or Form 1040A, line 11b. Turbotax 2008 free edition If the total distribution was not rolled over, enter the taxable portion of the part that was not rolled over on Form 1040, line 15b, or Form 1040A, line 11b. Turbotax 2008 free edition Put “Rollover” next to Form 1040, line 15b, or Form 1040A, line 11b. Turbotax 2008 free edition See your tax return instructions. Turbotax 2008 free edition   If you rolled over the distribution into a qualified plan (other than an IRA) or you make the rollover in 2014, attach a statement explaining what you did. Turbotax 2008 free edition Rollover From Employer's Plan Into an IRA You can roll over into a traditional 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; Annuity plan; Tax-sheltered annuity plan (section 403(b) plan); or Governmental deferred compensation plan (section 457 plan). Turbotax 2008 free edition A qualified plan is one that meets the requirements of the Internal Revenue Code. Turbotax 2008 free edition Eligible rollover distribution. Turbotax 2008 free edition   Generally, an eligible rollover distribution is any distribution of all or part of the balance to your credit in a qualified retirement plan except the following. Turbotax 2008 free edition A required minimum distribution (explained later under When Must You Withdraw IRA Assets? (Required Minimum Distributions) ). Turbotax 2008 free edition A hardship distribution. Turbotax 2008 free edition Any of a series of substantially equal periodic distributions paid at least once a year over: Your lifetime or life expectancy, The lifetimes or life expectancies of you and your beneficiary, or A period of 10 years or more. Turbotax 2008 free edition Corrective distributions of excess contributions or excess deferrals, and any income allocable to the excess, or of excess annual additions and any allocable gains. Turbotax 2008 free edition A loan treated as a distribution because it does not satisfy certain requirements either when made or later (such as upon default), unless the participant's accrued benefits are reduced (offset) to repay the loan. Turbotax 2008 free edition Dividends on employer securities. Turbotax 2008 free edition The cost of life insurance coverage. Turbotax 2008 free edition Any nontaxable amounts that you roll over into your traditional IRA become part of your basis (cost) in your IRAs. Turbotax 2008 free edition To recover your basis when you take distributions from your IRA, you must complete Form 8606 for the year of the distribution. Turbotax 2008 free edition See Form 8606 under Distributions Fully or Partly Taxable, later. Turbotax 2008 free edition Rollover by nonspouse beneficiary. Turbotax 2008 free edition   A direct transfer from a deceased employee's qualified pension, profit-sharing, or stock bonus plan; annuity plan; tax-sheltered annuity (section 403(b)) plan; or governmental deferred compensation (section 457) plan to an IRA set up to receive the distribution on your behalf can be treated as an eligible rollover distribution if you are the designated beneficiary of the plan and not the employee's spouse. Turbotax 2008 free edition The IRA is treated as an inherited IRA. Turbotax 2008 free edition For more information about inherited IRAs, see Inherited IRAs , earlier. Turbotax 2008 free edition Reporting rollovers from employer plans. Turbotax 2008 free edition    Enter the total distribution (before income tax or other deductions were withheld) on Form 1040, line 16a, or Form 1040A, line 12a. Turbotax 2008 free edition This amount should be shown in box 1 of Form 1099-R. Turbotax 2008 free edition From this amount, subtract any contributions (usually shown in box 5 of Form 1099-R) that were taxable to you when made. Turbotax 2008 free edition From that result, subtract the amount that was rolled over either directly or within 60 days of receiving the distribution. Turbotax 2008 free edition Enter the remaining amount, even if zero, on Form 1040, line 16b, or Form 1040A, line 12b. Turbotax 2008 free edition Also, enter "Rollover" next to Form 1040, line 16b, or Form 1040A, line 12b. Turbotax 2008 free edition Transfers Incident to Divorce If an interest in a traditional IRA is transferred from your spouse or former spouse to you by a divorce or separate maintenance decree or a written document related to such a decree, the interest in the IRA, starting from the date of the transfer, is treated as your IRA. Turbotax 2008 free edition The transfer is tax free. Turbotax 2008 free edition For detailed information, see Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Turbotax 2008 free edition Converting From Any Traditional IRA to a Roth IRA Allowable conversions. Turbotax 2008 free edition   You can withdraw all or part of the assets from a traditional IRA and reinvest them (within 60 days) in a Roth IRA. Turbotax 2008 free edition The amount that you withdraw and timely contribute (convert) to the Roth IRA is called a conversion contribution. Turbotax 2008 free edition If properly (and timely) rolled over, the 10% additional tax on early distributions will not apply. Turbotax 2008 free edition However, a part or all of the conversion contribution from your traditional IRA is included in your gross income. Turbotax 2008 free edition Required distributions. Turbotax 2008 free edition   You cannot convert amounts that must be distributed from your traditional IRA for a particular year (including the calendar year in which you reach age 70½) under the required distribution rules (discussed later). Turbotax 2008 free edition Income. Turbotax 2008 free edition   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. Turbotax 2008 free edition 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. Turbotax 2008 free edition   You do not include in gross income any part of a distribution from a traditional IRA that is a return of your basis, as discussed later. Turbotax 2008 free edition   You must file Form 8606 to report 2013 conversions from traditional, SEP, or SIMPLE IRAs to a Roth IRA in 2013 (unless you recharacterized the entire amount) and to figure the amount to include in income. Turbotax 2008 free edition   If you must include any amount in your gross income, you may have to increase your withholding or make estimated tax payments. Turbotax 2008 free edition See chapter 4. Turbotax 2008 free edition Recharacterizations You may be able to treat a contribution made to one type of IRA as having been made to a different type of IRA. Turbotax 2008 free edition This is called recharacterizing the contribution. Turbotax 2008 free edition See Can You Move Retirement Plan Assets? in chapter 1 of Publication 590 for more detailed information. Turbotax 2008 free edition How to recharacterize a contribution. Turbotax 2008 free edition   To recharacterize a contribution, you generally must have the contribution transferred from the first IRA (the one to which it was made) to the second IRA in a trustee-to-trustee transfer. Turbotax 2008 free edition If the transfer is made by the due date (including extensions) for your tax return for the year during which the contribution was made, you can elect to treat the contribution as having been originally made to the second IRA instead of to the first IRA. Turbotax 2008 free edition If you recharacterize your contribution, you must do all three of the following. Turbotax 2008 free edition Include in the transfer any net income allocable to the contribution. Turbotax 2008 free edition If there was a loss, the net income you must transfer may be a negative amount. Turbotax 2008 free edition Report the recharacterization on your tax return for the year during which the contribution was made. Turbotax 2008 free edition Treat the contribution as having been made to the second IRA on the date that it was actually made to the first IRA. Turbotax 2008 free edition No deduction allowed. Turbotax 2008 free edition   You cannot deduct the contribution to the first IRA. Turbotax 2008 free edition Any net income you transfer with the recharacterized contribution is treated as earned in the second IRA. Turbotax 2008 free edition Required notifications. Turbotax 2008 free edition   To recharacterize a contribution, you must notify both the trustee of the first IRA (the one to which the contribution was actually made) and the trustee of the second IRA (the one to which the contribution is being moved) that you have elected to treat the contribution as having been made to the second IRA rather than the first. Turbotax 2008 free edition You must make the notifications by the date of the transfer. Turbotax 2008 free edition Only one notification is required if both IRAs are maintained by the same trustee. Turbotax 2008 free edition The notification(s) must include all of the following information. Turbotax 2008 free edition The type and amount of the contribution to the first IRA that is to be recharacterized. Turbotax 2008 free edition The date on which the contribution was made to the first IRA and the year for which it was made. Turbotax 2008 free edition A direction to the trustee of the first IRA to transfer in a trustee-to-trustee transfer the amount of the contribution and any net income (or loss) allocable to the contribution to the trustee of the second IRA. Turbotax 2008 free edition The name of the trustee of the first IRA and the name of the trustee of the second IRA. Turbotax 2008 free edition Any additional information needed to make the transfer. Turbotax 2008 free edition Reporting a recharacterization. Turbotax 2008 free edition   If you elect to recharacterize a contribution to one IRA as a contribution to another IRA, you must report the recharacterization on your tax return as directed by Form 8606 and its instructions. Turbotax 2008 free edition You must treat the contribution as having been made to the second IRA. Turbotax 2008 free edition When Can You Withdraw or Use IRA Assets? There are rules limiting use of your IRA assets and distributions from it. Turbotax 2008 free edition Violation of the rules generally results in additional taxes in the year of violation. Turbotax 2008 free edition See What Acts Result in Penalties or Additional Taxes , later. Turbotax 2008 free edition Contributions returned before the due date of return. Turbotax 2008 free edition   If you made IRA contributions in 2013, you can withdraw them tax free by the due date of your return. Turbotax 2008 free edition If you have an extension of time to file your return, you can withdraw them tax free by the extended due date. Turbotax 2008 free edition You can do this if, for each contribution you withdraw, both of the following conditions apply. Turbotax 2008 free edition You did not take a deduction for the contribution. Turbotax 2008 free edition You withdraw any interest or other income earned on the contribution. Turbotax 2008 free edition You can take into account any loss on the contribution while it was in the IRA when calculating the amount that must be withdrawn. Turbotax 2008 free edition If there was a loss, the net income earned on the contribution may be a negative amount. Turbotax 2008 free edition Note. Turbotax 2008 free edition To calculate the amount you must withdraw, see Worksheet 1-4 under When Can You Withdraw or Use Assets? in chapter 1 of Publication 590. Turbotax 2008 free edition Earnings includible in income. Turbotax 2008 free edition   You must include in income any earnings on the contributions you withdraw. Turbotax 2008 free edition Include the earnings in income for the year in which you made the contributions, not in the year in which you withdraw them. Turbotax 2008 free edition Generally, except for any part of a withdrawal that is a return of nondeductible contributions (basis), any withdrawal of your contributions after the due date (or extended due date) of your return will be treated as a taxable distribution. Turbotax 2008 free edition Excess contributions can also be recovered tax free as discussed under What Acts Result in Penalties or Additional Taxes?, later. Turbotax 2008 free edition    Early distributions tax. Turbotax 2008 free edition   The 10% additional tax on distributions made before you reach age 59½ does not apply to these tax-free withdrawals of your contributions. Turbotax 2008 free edition However, the distribution of interest or other income must be reported on Form 5329 and, unless the distribution qualifies as an exception to the age 59½ rule, it will be subject to this tax. Turbotax 2008 free edition When Must You Withdraw IRA Assets? (Required Minimum Distributions) You cannot keep funds in a traditional IRA indefinitely. Turbotax 2008 free edition Eventually they must be distributed. Turbotax 2008 free edition If there are no distributions, or if the distributions are not large enough, you may have to pay a 50% excise tax on the amount not distributed as required. Turbotax 2008 free edition See Excess Accumulations (Insufficient Distributions) , later. Turbotax 2008 free edition The requirements for distributing IRA funds differ depending on whether you are the IRA owner or the beneficiary of a decedent's IRA. Turbotax 2008 free edition Required minimum distribution. Turbotax 2008 free edition   The amount that must be distributed each year is referred to as the required minimum distribution. Turbotax 2008 free edition Required distributions not eligible for rollover. Turbotax 2008 free edition   Amounts that must be distributed (required minimum distributions) during a particular year are not eligible for rollover treatment. Turbotax 2008 free edition IRA owners. Turbotax 2008 free edition   If you are the owner of a traditional IRA, you must generally start receiving distributions from your IRA by April 1 of the year following the year in which you reach age 70½. Turbotax 2008 free edition April 1 of the year following the year in which you reach age 70½ is referred to as the required beginning date. Turbotax 2008 free edition Distributions by the required beginning date. Turbotax 2008 free edition   You must receive at least a minimum amount for each year starting with the year you reach age 70½ (your 70½ year). Turbotax 2008 free edition If you do not (or did not) receive that minimum amount in your 70½ year, then you must receive distributions for your 70½ year by April 1 of the next year. Turbotax 2008 free edition   If an IRA owner dies after reaching age 70½, but before April 1 of the next year, no minimum distribution is required because death occurred before the required beginning date. Turbotax 2008 free edition Even if you begin receiving distributions before you attain age 70½, you must begin calculating and receiving required minimum distributions by your required beginning date. Turbotax 2008 free edition Distributions after the required beginning date. Turbotax 2008 free edition   The required minimum distribution for any year after the year you turn 70½ must be made by December 31 of that later year. Turbotax 2008 free edition    Beneficiaries. Turbotax 2008 free edition   If you are the beneficiary of a decedent's traditional IRA, the requirements for distributions from that IRA generally depend on whether the IRA owner died before or after the required beginning date for distributions. Turbotax 2008 free edition More information. Turbotax 2008 free edition   For more information, including how to figure your minimum required distribution each year and how to figure your required distribution if you are a beneficiary of a decedent's IRA, see When Must You Withdraw Assets? in chapter 1 of Publication 590. Turbotax 2008 free edition Are Distributions Taxable? In general, distributions from a traditional IRA are taxable in the year you receive them. Turbotax 2008 free edition Exceptions. Turbotax 2008 free edition   Exceptions to distributions from traditional IRAs being taxable in the year you receive them are: Rollovers, Qualified charitable distributions (QCD), discussed later, Tax-free withdrawals of contributions, discussed earlier, and The return of nondeductible contributions, discussed later under Distributions Fully or Partly Taxable . Turbotax 2008 free edition    Although a conversion of a traditional IRA is considered a rollover for Roth IRA purposes, it is not an exception to the rule that distributions from a traditional IRA are taxable in the year you receive them. Turbotax 2008 free edition Conversion distributions are includible in your gross income subject to this rule and the special rules for conversions explained in Converting From Any Traditional IRA Into a Roth IRA under Can You Move Retirement Plan Assets? in chapter 1 of Publication 590. Turbotax 2008 free edition Qualified charitable distributions (QCD). Turbotax 2008 free edition   A QCD is generally a nontaxable distribution made directly by the trustee of your IRA to an organization eligible to receive tax-deductible contributions. Turbotax 2008 free edition Special rules apply if you made a qualified charitable distribution in January 2013 that you elected to treat as made in 2012. Turbotax 2008 free edition See Qualified Charitable Distributions in Publication 590 for more information. Turbotax 2008 free edition Ordinary income. Turbotax 2008 free edition   Distributions from traditional IRAs that you include in income are taxed as ordinary income. Turbotax 2008 free edition No special treatment. Turbotax 2008 free edition   In figuring your tax, you cannot use the 10-year tax option or capital gain treatment that applies to lump-sum distributions from qualified retirement plans. Turbotax 2008 free edition Distributions Fully or Partly Taxable Distributions from your traditional IRA may be fully or partly taxable, depending on whether your IRA includes any nondeductible contributions. Turbotax 2008 free edition Fully taxable. Turbotax 2008 free edition   If only deductible contributions were made to your traditional IRA (or IRAs, if you have more than one), you have no basis in your IRA. Turbotax 2008 free edition Because you have no basis in your IRA, any distributions are fully taxable when received. Turbotax 2008 free edition See Reporting taxable distributions on your return , later. Turbotax 2008 free edition Partly taxable. Turbotax 2008 free edition    If you made nondeductible contributions or rolled over any after-tax amounts to any of your traditional IRAs, you have a cost basis (investment in the contract) equal to the amount of those contributions. Turbotax 2008 free edition These nondeductible contributions are not taxed when they are distributed to you. Turbotax 2008 free edition They are a return of your investment in your IRA. Turbotax 2008 free edition   Only the part of the distribution that represents nondeductible contributions and rolled over after-tax amounts (your cost basis) is tax free. Turbotax 2008 free edition If nondeductible contributions have been made or after-tax amounts have been rolled over to your IRA, distributions consist partly of nondeductible contributions (basis) and partly of deductible contributions, earnings, and gains (if there are any). Turbotax 2008 free edition Until all of your basis has been distributed, each distribution is partly nontaxable and partly taxable. Turbotax 2008 free edition Form 8606. Turbotax 2008 free edition   You must complete Form 8606 and attach it to your return if you receive a distribution from a traditional IRA and have ever made nondeductible contributions or rolled over after-tax amounts to any of your traditional IRAs. Turbotax 2008 free edition Using the form, you will figure the nontaxable distributions for 2013 and your total IRA basis for 2013 and earlier years. Turbotax 2008 free edition Note. Turbotax 2008 free edition If you are required to file Form 8606, but you are not required to file an income tax return, you still must file Form 8606. Turbotax 2008 free edition Send it to the IRS at the time and place you would otherwise file an income tax return. Turbotax 2008 free edition Distributions reported on Form 1099-R. Turbotax 2008 free edition   If you receive a distribution from your traditional IRA, you will receive Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Turbotax 2008 free edition , or a similar statement. Turbotax 2008 free edition IRA distributions are shown in boxes 1 and 2a of Form 1099-R. Turbotax 2008 free edition A number or letter code in box 7 tells you what type of distribution you received from your IRA. Turbotax 2008 free edition Withholding. Turbotax 2008 free edition   Federal income tax is withheld from distributions from traditional IRAs unless you choose not to have tax withheld. Turbotax 2008 free edition See chapter 4. Turbotax 2008 free edition IRA distributions delivered outside the United States. Turbotax 2008 free edition   In general, if you are a U. Turbotax 2008 free edition S. Turbotax 2008 free edition citizen or resident alien and your home address is outside the United States or its possessions, you cannot choose exemption from withholding on distributions from your traditional IRA. Turbotax 2008 free edition Reporting taxable distributions on your return. Turbotax 2008 free edition    Report fully taxable distributions, including early distributions on Form 1040, line 15b, or Form 1040A, line 11b (no entry is required on Form 1040, line 15a, or Form 1040A, line 11a). Turbotax 2008 free edition If only part of the distribution is taxable, enter the total amount on Form 1040, line 15a, or Form 1040A, line 11a, and the taxable part on Form 1040, line 15b, or Form 1040A, line 11b. Turbotax 2008 free edition You cannot report distributions on Form 1040EZ. Turbotax 2008 free edition What Acts Result in Penalties or Additional Taxes? The tax advantages of using traditional IRAs for retirement savings can be offset by additional taxes and penalties if you do not follow the rules. Turbotax 2008 free edition There are additions to the regular tax for using your IRA funds in prohibited transactions. Turbotax 2008 free edition There are also additional taxes for the following activities. Turbotax 2008 free edition Investing in collectibles. Turbotax 2008 free edition Making excess contributions. Turbotax 2008 free edition Taking early distributions. Turbotax 2008 free edition Allowing excess amounts to accumulate (failing to take required distributions). Turbotax 2008 free edition There are penalties for overstating the amount of nondeductible contributions and for failure to file a Form 8606, if required. Turbotax 2008 free edition Prohibited Transactions Generally, a prohibited transaction is any improper use of your traditional IRA by you, your beneficiary, or any disqualified person. Turbotax 2008 free edition Disqualified persons include your fiduciary and members of your family (spouse, ancestor, lineal descendent, and any spouse of a lineal descendent). Turbotax 2008 free edition The following are examples of prohibited transactions with a traditional IRA. Turbotax 2008 free edition Borrowing money from it. Turbotax 2008 free edition Selling property to it. Turbotax 2008 free edition Receiving unreasonable compensation for managing it. Turbotax 2008 free edition Using it as security for a loan. Turbotax 2008 free edition Buying property for personal use (present or future) with IRA funds. Turbotax 2008 free edition Effect on an IRA account. Turbotax 2008 free edition   Generally, if you or your beneficiary engages in a prohibited transaction in connection with your traditional IRA account at any time during the year, the account stops being an IRA as of the first day of that year. Turbotax 2008 free edition Effect on you or your beneficiary. Turbotax 2008 free edition   If your account stops being an IRA because you or your beneficiary engaged in a prohibited transaction, the account is treated as distributing all its assets to you at their fair market values on the first day of the year. Turbotax 2008 free edition If the total of those values is more than your basis in the IRA, you will have a taxable gain that is includible in your income. Turbotax 2008 free edition For information on figuring your gain and reporting it in income, see Are Distributions Taxable , earlier. Turbotax 2008 free edition The distribution may be subject to additional taxes or penalties. Turbotax 2008 free edition Taxes on prohibited transactions. Turbotax 2008 free edition   If someone other than the owner or beneficiary of a traditional IRA engages in a prohibited transaction, that person may be liable for certain taxes. Turbotax 2008 free edition In general, there is a 15% tax on the amount of the prohibited transaction and a 100% additional tax if the transaction is not corrected. Turbotax 2008 free edition More information. Turbotax 2008 free edition   For more information on prohibited transactions, see What Acts Result in Penalties or Additional Taxes? in chapter 1 of Publication 590. Turbotax 2008 free edition Investment in Collectibles If your traditional IRA invests in collectibles, the amount invested is considered distributed to you in the year invested. Turbotax 2008 free edition You may have to pay the 10% additional tax on early distributions, discussed later. Turbotax 2008 free edition Collectibles. Turbotax 2008 free edition   These include: Artworks, Rugs, Antiques, Metals, Gems, Stamps, Coins, Alcoholic beverages, and Certain other tangible personal property. Turbotax 2008 free edition Exception. Turbotax 2008 free edition    Your IRA can invest in one, one-half, one-quarter, or one-tenth ounce U. Turbotax 2008 free edition S. Turbotax 2008 free edition gold coins, or one-ounce silver coins minted by the Treasury Department. Turbotax 2008 free edition It can also invest in certain platinum coins and certain gold, silver, palladium, and platinum bullion. Turbotax 2008 free edition Excess Contributions Generally, an excess contribution is the amount contributed to your traditional IRA(s) for the year that is more than the smaller of: The maximum deductible amount for the year. Turbotax 2008 free edition For 2013, this is $5,500 ($6,500 if you are 50 or older), or Your taxable compensation for the year. Turbotax 2008 free edition Tax on excess contributions. Turbotax 2008 free edition   In general, if the excess contributions for a year are not withdrawn by the date your return for the year is due (including extensions), you are subject to a 6% tax. Turbotax 2008 free edition You must pay the 6% tax each year on excess amounts that remain in your traditional IRA at the end of your tax year. Turbotax 2008 free edition The tax cannot be more than 6% of the combined value of all your IRAs as of the end of your tax year. Turbotax 2008 free edition Excess contributions withdrawn by due date of return. Turbotax 2008 free edition   You will not have to pay the 6% tax if you withdraw an excess contribution made during a tax year and you also withdraw interest or other income earned on the excess contribution. Turbotax 2008 free edition You must complete your withdrawal by the date your tax return for that year is due, including extensions. Turbotax 2008 free edition How to treat withdrawn contributions. Turbotax 2008 free edition   Do not include in your gross income an excess contribution that you withdraw from your traditional IRA before your tax return is due if both the following conditions are met. Turbotax 2008 free edition No deduction was allowed for the excess contribution. Turbotax 2008 free edition You withdraw the interest or other income earned on the excess contribution. Turbotax 2008 free edition You can take into account any loss on the contribution while it was in the IRA when calculating the amount that must be withdrawn. Turbotax 2008 free edition If there was a loss, the net income you must withdraw may be a negative amount. Turbotax 2008 free edition How to treat withdrawn interest or other income. Turbotax 2008 free edition   You must include in your gross income the interest or other income that was earned on the excess contribution. Turbotax 2008 free edition Report it on your return for the year in which the excess contribution was made. Turbotax 2008 free edition Your withdrawal of interest or other income may be subject to an additional 10% tax on early distributions, discus