WHEN YOU CONVERT A TRADITIONAL IRA to a Roth IRA, you don't have to pay taxes
on your nondeductible contributions.
There's no income limit
on nondeductible contributions.
Further, by not deducting these contributions on your tax return, you pay taxes
on nondeductible IRA contributions in the year the dollars are contributed.
There's no income limit
on nondeductible contributions.
Not exact matches
If you made
nondeductible contributions to your IRA, you must calculate your RMD based
on the total balance, but your taxable income may be reduced proportionately for the after - tax contributions.
In addition, you can withdraw
nondeductible contributions (but not earnings
on those contributions) at any time without triggering taxes or penalties.
Mortgage interest
on purchase loans is still deductible under tax reform up to $ 750,000, but the deduction for interest
on home equity loans becomes
nondeductible once 2018 begins.
Once you've paid off that debt, take the same amount of money and apply it to your next highest - rate debt and so
on until your
nondeductible debt is gone.
Similarly, the term «
nondeductible IRA» includes not only a regular IRA for which deductions aren't available, but also a Roth IRA if you expect to withdraw the earnings before age 59 1/2 and pay tax
on the distribution.
If you funded your IRA with
nondeductible contributions, then you will owe taxes
on the earnings only.
Any money you contribute to a traditional IRA that you do not deduct
on your tax return is a «
nondeductible contribution.»
If you only have one traditional IRA, the amount of the distribution to be taxed equals the account balance
on the conversion date minus any
nondeductible contributions.
If these
nondeductible contributions represent your only IRA money, then you will just owe taxes
on the earnings when you convert to a Roth IRA.
If your income is very high, you might not be able to deduct the Traditional IRA contribution (wholly, or in part)
on your 2016 tax return either, and if you are in that high - earner category, you should file Form 8606 with your tax return to tell the IRS that you have made a
nondeductible contribution to your Traditional IRA.
In addition, you can withdraw
nondeductible contributions (but not earnings
on those contributions) at any time without triggering taxes or penalties.
If you made
nondeductible contributions to your IRA, you must calculate your RMD based
on the total balance, but your taxable income may be reduced proportionately for the after - tax contributions.
Income tax is certainly due
on the total amount of the distribution, less that part of the distribution that is a return of
nondeductible post-tax contributions, if any, to the Traditional IRA.
However, you'll still have to pay tax
on amounts not considered a return of your
nondeductible contributions.
Form 5330 determines if employers owe taxes based
on providing excess fringe benefits,
nondeductible contributions to qualified plans or when there is a failure to pay a liquidity shortfall.
Each Fund is subject to a 4 %
nondeductible excise tax
on certain undistributed amounts of ordinary income and capital gain under a prescribed formula contained in Section 4982 of the Code.
Most of the
nondeductible expenses above show up under the «Other Expenses» section of the Schedule C or
on the corporate tax returns.