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J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return by J.K. Lasser Institute

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8.6 Nondeductible Contributions to Traditional IRAs

If you are not allowed to deduct any IRA contributions for 2012 because of the phaseout rule (8.4), you may make nondeductible contributions of up to $5,000 ($6,000 if age 50 or over at the end of 2012) where you have compensation of at least that much. If the deduction limit is reduced under the phaseout rules (8.4), you may make a nondeductible contribution to the extent the maximum contribution limit of $5,000 (or $6,000) exceeds the deductible limit (8.4).

If you make contributions to a traditional IRA during the year, you may not know whether your active participation status (8.5) and modified adjusted gross income (MAGI) will permit you to claim a deduction under the phaseout rules in 8.4. You can make your contribution and wait until you file your return to determine if you are eligible for a deduction. Assume that you make a contribution and after the end of the year you determine that you are eligible for only a portion of the deductible amount under the phaseout rule (8.4). In that case, you can leave the nondeductible portion in a nondeductible traditional IRA (reporting it on Form 8606), or you may recharacterize (8.22) the nondeductible contribution as a Roth IRA contribution assuming you qualify to contribute to a Roth IRA (8.20). On the other hand, you may decide to withdraw the nondeductible contribution as discussed below.

Roth IRA alternative.

If you are not barred from making Roth IRA contributions (8.20) because ...

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