Nondeductible contributions for the traditional IRA

Forum|Forum|2 years ago
April 8, 2024
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Hello,

Since this is my first year report with my newly open IRA in 2023, want to make sure I'm doing it right.

When I open the this traditional IRA account, per bank request, I deposited some money from my saving.

Assuming if I understand it correctly, that make it "nondeductible contributions".

Thus, with Turboxtax, I should go with "Traditional IRA " > Total Contribution Amount $ > 0$ of Transferred to Roth > Yes on Nondeductible contributions > $0 on Basis (Since IRA is opened on 2023) > Yes, Part of Contribution is Nondeductible and the Amount $

Hope I'm correct on this one, and thank you in advance.

Best answer by AnnetteB6

If you want to report your contribution as non-deductible, the steps you outlined are correct. To verify this, take a look at Form 8606 generated as part of your return and make sure that line 1 shows the amount that you contributed to the Traditional IRA.

Putting money into the Traditional IRA from your savings account does not necessarily make it a non-deductible contribution. The income you reported on your tax return, your filing status, and whether you are covered by a retirement plan at your job are all factors to determine whether your contribution can be deductible if you wish. Making it a deductible contribution can reduce your taxes, but it will make the future distributions from the account taxable.

If you expect to convert the Traditional IRA to a Roth IRA down the road, then making the contribution non-deductible is the better choice.