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Old 03-20-2011, 10:38 AM
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Join Date: Mar 2011
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IRA deduction

In 2009, I contributed $6000 to an IRA.(I am over 50) Because of income restrictions, I was only able to deduct $2040 from my 2009 taxes and did fill out a form 8606.
Question is this. Since I have $4060(non deductable) funds left from 2009 in this IRA, can I deduct this amount on my 2010 taxes? I will meet the income restrictions for 2010.



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Old 03-21-2011, 08:34 AM
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“Since I have $4060(non deductable) funds left from 2009 in this IRA, can I deduct this amount on my 2010 taxes? I will meet the income restrictions for 2010”--->No. I don’t think so. You can deduct it later when you make your withdrawal from your account; as you saidabove, you must file Form 8606 to designate contributions as nondeductible. When you take your regular IRA distributions during retirement, you’ll pay tax on the growth. However, any non-deductible contributions are considered basis and, since you effectively paid tax on the money when you made the contribution, you won’t have to pay tax on it again later. Say you had made a $2,000 non-deductible contribution one year long ago and your account balance, through additional deductible contributions and investment growth, was worth $20,000 when you make a withdrawal. If you were to make a $1,000 withdrawal during retirement, only $900 would be considered taxable income since 10% (10%=$2,000/ $20,000) was a return of non-deductible basis.



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