Do I need to declare previous year Roth IRA contributions?

[IdahoanTaxPayer]

I am confused on whether I have to report my Roth IRA contributions each year. I've contributed to my roth since 2018. In 2021 I got married and both my wife and I contributed to our own individual Roths since. I've always prepared my own taxes (via an online software package). My questions are:

I didn't notice until this year that my tax software asked me about contributions to a Roth IRA. The software allowed me to go through and fill in my contributions for last year and all of the years back to 2018 when I started contributing. After I was done filling in my taxes I noticed that in the PDF version of the return it included a sheet with the title "2023 ROTH IRA RECORD WORKSHEET" listing all my contributions for each year. It included one for my wife as well. My questions are:

1. Do I actually have to report these contributions on my taxes for all other years dating to 2018? If so, which form do I have to fill out? and if the form has been updated do I have to find the version of the form available in 2018, 2019, 2020, etc.?

2. Do I have to submit an amended tax return for each of those years since 2018 even though my AGI did not change?

3. Is there a penalty for submitting these forms?

4. I read that I may need to file form 5498 but in other places I read that it is 'recommended' but not necessary for Roth contributions. 

Thank-you.

[VolvoGirl]

You don’t file form 5498.   That is a form the IRA sends you to report your contributions.  Yes you should enter Roth contributions each year even if they are not deductible and don’t show up on your tax return.  Turbo Tax needs to know them to check against your income to see if you were eligible to make the contribution or owe a penalty for excess contribution.  

[IdahoanTaxPayer]

Thank-you for the response. 

So I started doing that this year. I actually went back and filled in all of my contributions dating back to 2018. in the software. So if I am understanding you correctly this is not something for me to file for the IRS but it is something that turbotax (or whatever tax-preparation software I use) uses to do some math and see if I can actually make  contributions given my income and if I have made too many contributions in a single year. So in essence I don't have to worry about filing some separate form to the IRS for me not entering that information previously (i make well below the income limit for roth contributions and I have contributed each year just below the max allowed).

If all of the above is correct, and none of that contribution info is actually not reported to the IRS then how would the IRS know that when I withdraw contributions from my ROTH IRA sometime down the road (before early retirement age) that whatever I am withdrawing is below or above my total contributions? 

[VolvoGirl]

Your contributions don’t matter for ROTH withdrawals.  The withdrawal comes out tax free.  It can be more or less than your contributions.  Like if your account had a lot of gains.  @dmertz 

[dmertz · Accepted solution]

Forms 5498 report to you and to  the IRS how much you have contributed to your Roth IRAs.  If you make a nonqualified distribution, the IRS generally relies on you to accurately prepare Form 8606 Part III where you must indicate the amount of your basis in Roth IRA contributions and conversions, but the Forms 5498 give the IRS the necessary details to determine if your entries on Form 8606 are accurate, should they choose to check.

[IdahoanTaxPayer]

Dmertz, so are you saying that I have to file form 5498 each year to report my contributions? And if so, then do I have to file the form for all the previous years I haven’t filed it?

[dmertz]

No.  The IRA custodian files Form 5498 with the IRS and sends you a copy.

[Opus 17]

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@IdahoanTaxPayer wrote:

Dmertz, so are you saying that I have to file form 5498 each year to report my contributions? And if so, then do I have to file the form for all the previous years I haven’t filed it?

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1.

No.  The 5498 is issued to you, usually later in the year, so you can keep track of your contributions.  A copy goes to the IRS.  By itself, it has nothing to do with your tax return, although in theory, the IRS can cross-check the information with other information in your file to identify discrepancies.

2.

If you have an excess Roth IRA contribution, you must report it and either remove it before the tax deadline, or pay a penalty.  Since the 5498 is usually issued after tax season, you must report your Roth contributions from your own personal financial records.  

3.

The only way to know if your Roth IRA contribution is considered "excess" is to either know the rules (here: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-li...) or to enter your contributions into Turbotax, which knows the rules.  Turbotax will tell you if your contribution is considered "excess", but you aren't required to enter the amount if you know what the rules are and you know your contribution is ok.  

4. 

The other time you need to know what your original contributions were, is if you want to make a withdrawal before age 59-1/2.  Before that age, you can withdraw contributions tax-free, but if you withdraw earnings or conversion amounts, they may be taxable and/or incur an additional 10% penalty.  If you can keep track of your Roth contributions yourself, you don't need to enter them in Turbotax.  But if you do enter them, the program will keep track for you in case you make a withdrawal and need to know the amount of previous year contributions.  

[IdahoanTaxPayer]

Thank you for your response. This helps a lot!