“Ignoring the limits, am I allowed to take a deduction for the cash I contributed that was already taxed?“ Husband was participating in a 401K during 2012 but passed away. I took $5000 out of pocket cash and contributed it to my traditional IRA. “========> No. You are not allowed to take a dedcuition for the after tax cash contributed to the IRA.
“Should I file form 8606 with the amount as nondeductible for my records for when I take a distribution then allocate the taxable and nontaxable amount? Or can a deduction be made.”=======>Since you made non-deductible IRA contributions , you need to file Form 8606. Form 8606 needs to be normally submitted with a timely filed Form 1040. You should file Form 8606 to report your basis in a non-deductible IRA. File one Form 8606 for each year that you make non-deductible contributions. This will establish your basis in the IRA. You would then be eligible either to convert your non-deductible IRA into Roth IRA, or you could begin taking distributions from the non-deductible IRA. Unless you submit a Form 8606 you may be taxed on your 2012 contributions again when you withdraw the contributions