Do I need to declare previous year Roth IRA contributions?

Forum|Forum|1 year ago
September 24, 2024
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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.

Best answer by dmertz

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.

VolvoGirl

Employee

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.

IdahoanTaxPayerAuthor

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

Employee

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