Non-Deductible

jd114 · ‎April 2, 2020

I was informed by my bank that I made a non-deductible contribution. A low amount. Not sure why.

I've already incorporated my Traditional Roth IRA into my deductible. Is their any need to add this as well?

HelenC12 · ‎April 2, 2020

Yes. Any money you contribute to a traditional IRA that you do not deduct on your tax return is a “nondeductible contribution.” You still must report these contributions on your return, and you use Form 8606 to do so.

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. Source: TurboTax

We'll automatically generate and fill out Form 8606 (Nondeductible IRAs) if you reported any of these on your tax return. See Where do I find Form 8606?

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