Tax Hell

February 21, 2008 5:30 AM

I forgot to claim a $4,000 contribution to a Roth IRA account during the 2006 tax season. How do I go about claiming this in the 2007 tax season? (more inside)

Now as far as I understand, claiming a contribution to a Roth IRA on your taxes can only help you (i.e. give you a larger refund). So I shouldn't be in any trouble for forgetting. Is that correct? Can I claim the contribution I made in 2006 in 2007 or do I have to amend my 2006 tax return?

Just want to do my homework before I visit a tax professional, thanks :)

posted by mand0 to law & government (11 comments total)

a Roth IRA contribution is done after-taxes- that's why you don't pay taxes on it when you withdraw. You can't claim anything, it won't give you a refund of any sort.
posted by unexpected at 5:38 AM on February 21

I am doing my taxes online and there's an entry for "Enter any Roth IRA contributions you made during 2007". When I input the $4,000 there, I get a $200 entry in the "Retirement Saving Credit" section of the tax return; which boosts my refund by $200.
posted by mand0 at 5:47 AM on February 21

you might not be able to put it on this years taxes. but you could probably fill out a 1040X and amend last years claim so that you get your money. I've never done this, but I know it's sometimes an available route to take.
posted by ArgentCorvid at 5:56 AM on February 21

You cannot claim any deduction from 2006 on your 2007 taxes; you can most definitely get in trouble for that. In order to claim a deduction on your 2006 taxes that you forgot, you have to file an amended 2006 return. H&R Block has some ads now that say they will look over your previous year's tax return and see if there are any missed deductions, and refile for you if there are - I don't know if there is any catch to that, but it's worth having them take a look.
posted by bedhead at 6:01 AM on February 21

IRS: "Roth IRA contributions are not tax deductible and are not reported on your tax return. "

OTOH, that's not true. Form 8880 asks for "Traditional and Roth IRA contributions". Oops.
posted by smackfu at 6:56 AM on February 21

You're talking about the Retirement Savings Credit, which is designed to encourage lower-income people to save for retirement (which is why some higher-income folks may not be aware of it.)

If your adjusted gross income was under $26,000 in 2006, and you weren't a full-time student or a dependent of someone else, then you should get a credit of $200-$1000, depending on your income. (It's non-refundable, though, which means if you had $0 tax liability in 2006 then there's no point in trying for it.) To get it, you'll want to file an amended return for 2006-- you can't just claim extra on your 2007 taxes. (More info from the IRS about amended returns here.)

And yeah, the IRS doesn't charge you penalties for not claiming as much as you're due!
posted by EmilyClimbs at 7:18 AM on February 21 [3 favorites]

EmilyClimbs has it. Form 1040X is pretty straightforward. Don't bother going to H&R Block.
posted by Dec One at 7:55 AM on February 21

You would have to do an amended return for 2006 , which is not a big deal. I do not think you can claim it for 2007. Anybody, was that credit in effect in 2006?
posted by francesca too at 8:41 AM on February 21

Yes, it has been in effect since at least 2003.
posted by Dec One at 8:57 AM on February 21

You guys have been very helpful, thanks again.
posted by mand0 at 9:50 AM on February 21

I didn't know about that deduction either, thanks for the tip!

(Why is it that single people making 30-40K never get any of the goodies? No tax breaks for the rich, no tax breaks for the poor, no head of household, no nothing.)
posted by gjc at 7:33 PM on February 21