Author Topic: Mistake on Taxes? Line 32 on 1040 left blank (11,000 contributed)  (Read 705 times)

maxpower

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Hey all,
I'm a worthless when it comes to preparing taxes. We outsource that to a professional.

My wife and I have recently begun maxing out our retirement accounts, but it doesn't look like that has been reflected on our 1040.

Here's the data:

Married filing jointly
$48,728 total income (line 22)
My wife maxes out her Simple IRA employer sponsored plan
We both contribute $5500 to both of our traditional IRAs (11,000 total)

Now, here's what seems off to me:

On our 1040, under Adjusted Gross Income, the line pertaining to a Traditional IRA deduction was left blank (line 32).

Shouldn't our income have been adjusted downward an additional 11,000?

Any insight would be greatly appreciated!

Thank you!

terran

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Re: Mistake on Taxes? Line 32 on 1040 left blank (11,000 contributed)
« Reply #1 on: March 17, 2017, 07:33:46 AM »
Yes, if you made traditional IRA contributions, and you are eligible for the deduction (you are at that income level), then line 32 should include the amount of your contributions. Silly question: did you tell your tax preparer that you made these contributions?

The simple IRA contributions are likely accounted for one way or another on your W2 -- make sure this adds up given the amount of contributions, your gross income vs what's reported on your W2, and your other payroll deductions.

Errol Flynn

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Re: Mistake on Taxes? Line 32 on 1040 left blank (11,000 contributed)
« Reply #2 on: March 17, 2017, 10:44:12 AM »
Yes, given what you've stated, your AGI should be $37,728. Make sure your contributions were for 2016 and, as terran points out, make sure that your tax preparer is aware that you made these contributions. You may need to provide them with Form 5498 (IRA Contribution Information) from your IRA custodian. The bad news is you may need to file an amended return, but the good news is this reduced AGI now qualifies you for a slightly larger Saver's Credit!

MustacheAndaHalf

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Re: Mistake on Taxes? Line 32 on 1040 left blank (11,000 contributed)
« Reply #3 on: March 17, 2017, 10:49:22 AM »
Unrequested editorial comment - in the 15% tax bracket, a Roth IRA can be more attractive than a Traditional IRA.  But it depends on if you're managing things like the saver's credit (which I assume you aren't, given that you turn everything over to a tax pro).

dandarc

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Re: Mistake on Taxes? Line 32 on 1040 left blank (11,000 contributed)
« Reply #4 on: March 17, 2017, 10:56:06 AM »
Others have mentioned that probably is a mistake, so I'll just ask a question.  Why are you outsourcing your taxes at that income?
Link to my journal, so I can find it quickly - http://forum.mrmoneymustache.com/journals/dandarc's-journal/

MDM

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Re: Mistake on Taxes? Line 32 on 1040 left blank (11,000 contributed)
« Reply #5 on: March 17, 2017, 12:11:43 PM »
...things like the saver's credit....
If the OP could get AGI below $37,000, the saver's credit would reduce federal tax to $0.

Errol Flynn

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Re: Mistake on Taxes? Line 32 on 1040 left blank (11,000 contributed)
« Reply #6 on: March 17, 2017, 12:43:22 PM »
...things like the saver's credit....
If the OP could get AGI below $37,000, the saver's credit would reduce federal tax to $0.
That's the dream. OP, did you happen to pay $729 in alimony last year?

braje

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Re: Mistake on Taxes? Line 32 on 1040 left blank (11,000 contributed)
« Reply #7 on: March 17, 2017, 01:07:01 PM »
Hey all,
I'm a worthless when it comes to preparing taxes. We outsource that to a professional. I would call the preparer and asked.  They may have thought you did a Roth instead of a Traditional. Also check line 51 to see if it has your Retirement Savers Credit.

My wife and I have recently begun maxing out our retirement accounts, but it doesn't look like that has been reflected on our 1040.

Here's the data:

Married filing jointly
$48,728 total income (line 22)
My wife maxes out her Simple IRA employer sponsored plan
We both contribute $5500 to both of our traditional IRAs (11,000 total)

Now, here's what seems off to me:

On our 1040, under Adjusted Gross Income, the line pertaining to a Traditional IRA deduction was left blank (line 32).

Shouldn't our income have been adjusted downward an additional 11,000?

Any insight would be greatly appreciated!

Thank you!

maxpower

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Re: Mistake on Taxes? Line 32 on 1040 left blank (11,000 contributed)
« Reply #8 on: March 18, 2017, 08:25:00 AM »
Hey All,
Braje hit the nail on the head. She thought all my IRA contributions were Roth. Mission accomplished. Now, to respond to a couple questions/comments:

Why are you outsourcing your taxes at that income?

Largely because my mind is not well suited for handling government forms. It stirs a very primal rage in me. It's worth it to me to outsource for that reason. Also, I own a small business which only complicates things.

in the 15% tax bracket, a Roth IRA can be more attractive than a Traditional IRA.

I hear you. We're shooting to pull off the IRA conversion ladder, so the Traditional IRA route suites us... assuming the laws remain what they are...

DavidAnnArbor

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Re: Mistake on Taxes? Line 32 on 1040 left blank (11,000 contributed)
« Reply #9 on: March 18, 2017, 10:30:53 AM »
Unrequested editorial comment - in the 15% tax bracket, a Roth IRA can be more attractive than a Traditional IRA.  But it depends on if you're managing things like the saver's credit (which I assume you aren't, given that you turn everything over to a tax pro).

A traditional IRA can really help you even at the 15% tax bracket because you might also be saving having to state income tax on that money.
Moreover, if you're buying your health insurance through the ACA marketplace then you will also get additional savings on your premiums subsidy from the government to cover the cost of that health insurance.