Question

Deductible v. non-deductible IRA

Forum|Forum|5 years ago
July 14, 2020
1 reply
0 views

I contributed to a traditional IRA in early 2020 (for 2019) and immediately converted it to a Roth. I did not contribute to any employer-sponsored retirement accounts for 2019 (e.g., 401k). In reporting the traditional IRA on my tax return for 2019, it is asking me if I'd like to make these IRA contributions nondeductible. Can I? I assume that because I converted the IRA to a Roth (to be reported on my 2020 return after I get my 1099-R), I can't take the deduction. Am I wrong?

Thanks!

macuser_22

Employee

It's your choice. You can either deduct it and lower your 2019 tax (or increase your refund) and then pay the tax on the 2020 conversion, or make it non-deductible on a 2019 8606 form and then use that basis to offset the 2020 tax next year. Which you do depends if you want a bigger 2019 refund and pay tax in 2020 or defer it to 2020.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

J

jml442Author

Ah, ok I see. If I choose to make it non-deductible now when filing my 2019 taxes, will the 8606 form be generated by TurboTax? Or will I have have to fill the online form from the IRS?

macuser_22

Employee

The 8606 should be automatic and have the non-deductible contribution on lines 1, 3 & 14 if you have no other preexisting non-deductible contributions.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**