Interest earned. Although interest earned from your IRA is generally not taxed in the year earned, it is not tax-exempt interest. Do not report this interest on your tax return as tax-exempt interest.

Penalty for failure to file Form 8606. If you make nondeductible contributions to your traditional IRA and you do not file Form 8606, Nondeductible IRAs, with your tax return, you may have to pay a $50 penalty.

Contributions to spousal IRAs. In the case of a married couple filing a joint return, up to $2,000 can be contributed to IRAs (other than SIMPLE and education IRAs) on behalf of each spouse, even if one spouse has little or no compensation. This means that the total combined contributions that can be made on behalf of a married couple can be as much as $4,000 for the year. See Spousal IRA limit, under Traditional IRAs and under Can I contribute to a Roth IRA for my spouse? under Roth IRAs, later.

Employer contributions under a SEP plan are not counted when figuring the limits just discussed. SEP plans are discussed in Publication 590.

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