IRA contributions and taxes

[shelfins]

A quick question for you tax gurus out there: My fiance and I both just made 2013 IRA contributions -- I put in the last $300 to max out my 2013 ROTH IRA contributions, and my fiance put all $5500 in his (non-ROTH) IRA. Here's the thing: We both did this after filed our 2013 taxes. So here are my questions:

1) Do I need to amend my taxes to reflect this change? Since it's a ROTH, it's all taxed, so it shouldn't make any difference, right?

2) Does my fiance need to amend his taxes? It makes a big difference to his taxes (a $1375 difference), but does he have to deal with this in this tax year, or would he be able to recoup this money somehow when he files his 2014 taxes instead?

[Frankies Girl]

Might be worth checking about the saver's credit:

http://www.irs.gov/uac/Get-Credit-for-Your-Retirement-Savings-Contributions

And as I understand it (but do check to verify) you can amend your taxes to claim a refund within a 3 year period, so he may not need to do it right now if you qualify.

[Wile E. Coyote]

For your contribution to a Roth, no need to do anything since they are not reported on your return.  As for your fiancé, he should amend in order to claim the refund.  He will not be able to recover it in his 2014 return, as it was designated as a 2013 contribution.

[jexy103]

For your contribution to a Roth, no need to do anything since they are not reported on your return.  As for your fiancé, he should amend in order to claim the refund.  He will not be able to recover it in his 2014 return, as it was designated as a 2013 contribution.

This is at least partially incorrect- Roth contributions ARE reported on your tax return. If they are eligible (not excess) contributions, they do not affect your tax liability, but you are required to report them so the IRS can ensure they aren't excess contributions. As far as needing to amend to fix it, I don't know enough to speak on that. Your both should either search irs.gov or ask a tax preparation professional (maybe H&R Block or someone would even give him free advice over the phone).

[Wile E. Coyote]

For your contribution to a Roth, no need to do anything since they are not reported on your return.  As for your fiancé, he should amend in order to claim the refund.  He will not be able to recover it in his 2014 return, as it was designated as a 2013 contribution.

This is at least partially incorrect- Roth contributions ARE reported on your tax return. If they are eligible (not excess) contributions, they do not affect your tax liability, but you are required to report them so the IRS can ensure they aren't excess contributions. As far as needing to amend to fix it, I don't know enough to speak on that. Your both should either search irs.gov or ask a tax preparation professional (maybe H&R Block or someone would even give him free advice over the phone).

It's not incorrect.  You do not report Roth contributions.  You report excess contributions to any IRA, including Roth IRAs, on Form 5329 so that you can pay the penalty, but the question was not about how to report excess contributions.

The IRS website does have some helpful information, but please remember that IRS publications are not law and can not be relied upon to avoid penalties.  Nonetheless, here is what Pub 590 has to say about reporting Roth IRA contributions:

Contributions not reported.   You do not report Roth IRA contributions on your return.

http://www.irs.gov/publications/p590/ch02.html#en_US_2013_publink1000253532

[GregO]

Does my fiance need to amend his taxes? It makes a big difference to his taxes (a $1375 difference), but does he have to deal with this in this tax year, or would he be able to recoup this money somehow when he files his 2014 taxes instead?

Yes, he needs to amend his taxes.  And while he may have the option to wait, he really shouldn't.  It's the same thing as over-withholding on your paycheck, you are giving Uncle Sam a free loan.  He is owed money from the IRS, so he should file his amended return and collect the money they owe him.  And the last thing he wants to do is put it off and then forget about it and never collect the money...

[jexy103]

It's not incorrect.  You do not report Roth contributions.  You report excess contributions to any IRA, including Roth IRAs, on Form 5329 so that you can pay the penalty, but the question was not about how to report excess contributions.

The IRS website does have some helpful information, but please remember that IRS publications are not law and can not be relied upon to avoid penalties.  Nonetheless, here is what Pub 590 has to say about reporting Roth IRA contributions:

Contributions not reported.   You do not report Roth IRA contributions on your return.

http://www.irs.gov/publications/p590/ch02.html#en_US_2013_publink1000253532

My apologies- every time I've filed my taxes online, I've been asked to input my Roth IRA contributions. I guess that's just for the tax software to determine that I didn't make excess contributions, not for the IRS to keep tabs on it. That publication is quite clear that Roth IRA contributions are not reported to the IRS. Thank you for teaching all of us.

Yes, he needs to amend his taxes.  And while he may have the option to wait, he really shouldn't.  It's the same thing as over-withholding on your paycheck, you are giving Uncle Sam a free loan.  He is owed money from the IRS, so he should file his amended return and collect the money they owe him.  And the last thing he wants to do is put it off and then forget about it and never collect the money...

It's not the same as over-withholding on your paycheck, because it was a Roth IRA, which is after-tax. If the OP had contributed to a Traditional IRA, then yes, he would have to amend his tax return and would receive more back because Traditional are pre-tax and therefore taxes are affected. Taxes are not affected by contributions to Roth accounts because taxes are withheld prior to the contribution.

[Wile E. Coyote]

Yes, he needs to amend his taxes.  And while he may have the option to wait, he really shouldn't.  It's the same thing as over-withholding on your paycheck, you are giving Uncle Sam a free loan.  He is owed money from the IRS, so he should file his amended return and collect the money they owe him.  And the last thing he wants to do is put it off and then forget about it and never collect the money...

It's not the same as over-withholding on your paycheck, because it was a Roth IRA, which is after-tax. If the OP had contributed to a Traditional IRA, then yes, he would have to amend his tax return and would receive more back because Traditional are pre-tax and therefore taxes are affected. Taxes are not affected by contributions to Roth accounts because taxes are withheld prior to the contribution.
[/quote]

GregO, was referring to the fiancé's traditional IRA contribution, not a Roth IRA contribution.