IRA deduction

[CubsfanInNC]

Do I need to enter our contribution amounts in TurboTax if we don't qualify for deduction? If I put zero, that seems like I'm lying.

[MarilynG1]

You should enter your Non-Deductible IRA Contributions, since they are reported and tracked on Form 8606.

Reporting them saves you money down the road. That’s because no individual’s money is supposed to be subject to federal income tax twice.

Form 8606 gets it “on the record” that a portion of the money in your IRA has already been taxed. Later on, when you take distributions, a portion of the money you get back will not be subject to income tax.

Here's more info on Form 8606.

@CubsfanInNC 

[CubsfanInNC]

Thanks. However in this situation, it's not after-tax dollars. I put in estimate numbers and we get $0 deduction. So do you think I need to find the real numbers if it doesn't affect our tax amount? or leave blank?

[ErnieS0]

Yes. Enter your actual contribution even if you don’t get a deduction. As Tax Expert @MarilnG1 says, TurboTax will put your after-tax basis on Form 8606. That shows IRS you contributed after-tax money so your withdrawals won’t be 100% taxed when you retire.

If your contributions are nondeductible, consider recharacterizing them to a Roth IRA (assuming you are under the income limits). A Roth generally offers more advantages than a nondeductible traditional IRA contribution because your earnings are tax-free upon withdrawal.

With a nondeductible traditional IRA, only your after-tax contributions are tax-free.

You can recharacterize until you file your tax return. If you file an extension, you have until the extension deadline.

[CubsfanInNC]

I am not referring to after-tax money. 

This is pre-tax money through paychecks.

[DanaB27]

Are you talking about contributions to your retirement plan at work (taken from your paycheck)? If yes, then you do not enter these in the IRA contribution section. This will be already reported on your W-2 box 12.

If you made a direct contribution to an IRA (outside of work) then you should enter them in TurboTax in the IRA contribution section. It is always a good idea to enter the IRA contributions to verify that you didn't make an excess contribution or you might qualify for the Saver's Credit.

 If you made a traditional IRA contribution for 2022 but you cannot deduct the traditional IRA contribution then you will have a basis and this needs to be tracked on Form 8606 as Tax Expert MarilynG1 and Tax Expert ErnieS0 mentioned.