| Instructions for Form 8606 |
2006 Tax Year |
This is archived information that pertains only to the 2006 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
Name and social security number (SSN).
If you file a joint return, enter only the name and SSN of the spouse whose information is being reported on Form
8606. If both you and your spouse
are required to file Form 8606, file a separate Form 8606 for each of you.
Part I—Nondeductible Contributions to Traditional IRAs and Distributions From Traditional, SEP, and SIMPLE IRAs
If you used the IRA Deduction Worksheet in the Form 1040 or 1040A instructions, subtract line 12 (line 10 for Form 1040A)
of the worksheet (or the
amount you chose to deduct on Form 1040, line 32, or Form 1040A, line 17, if less) from the smaller of line 10 or line 11
(line 8 or line 9 for Form
1040A) of the worksheet. Enter the result on line 1 of Form 8606. You cannot deduct the amount included on line 1.
If you used the worksheet Figuring Your Reduced IRA Deduction for 2006 in Pub. 590, enter on line 1 of Form 8606 any nondeductible
contributions
from the appropriate lines of that worksheet.
If you did not have any deductible contributions, you can make nondeductible contributions up to your contribution limit.
Enter on line 1 of Form
8606 your nondeductible contributions.
Do not include on line 1 contributions that you had returned to you with the related earnings (or less any loss). See page
4.
If this is the first year you are required to file Form 8606, enter -0-. Otherwise, use the chart in the next column to find
the amount to enter on
line 2.
However, you may need to enter an amount other than -0- or adjust the amount from the chart if your basis changed because
of any of the following.
-
You had a return of excess traditional IRA contributions (see page 4).
-
Incident to divorce, you transferred or received part or all of a traditional IRA (see the last bulleted item under Line 7 on
the next page).
-
You rolled over any nontaxable portion of your qualified employer plan to a traditional or SEP IRA. Include the nontaxable
portion on
line 2.
If you made contributions to traditional IRAs for 2006 in 2006 and 2007 and you have both deductible and nondeductible contributions,
you can
choose to treat the contributions made in 2006 first as nondeductible contributions and then as deductible contributions,
or vice versa. But the
amount on line 4 cannot be less than the excess, if any, of the amount on line 1 over the contributions you actually made
in 2006.
Example. You made contributions for 2006 of $2,000 in May 2006 and $2,000 in January 2007, of which $3,000 are deductible and $1,000
are
nondeductible. You choose $1,000 of your contribution in 2006 to be nondeductible. You enter the $1,000 on line 1, but not
line 4, and it becomes part
of your basis for 2006.
Although the contributions to traditional IRAs for 2006 that you made from January 1, 2007, through April 16, 2007, can be
treated as
nondeductible, they are not included in figuring the nontaxable part of any distributions you received in 2006.
Enter the total value of all your traditional, SEP, and SIMPLE IRAs as of December 31, 2006, plus any outstanding rollovers.
A statement should be
sent to you by January 31, 2007, showing the value of each IRA on December 31, 2006. However, if you recharacterized any amounts,
enter on line 6 the
total value taking into account all recharacterizations, including recharacterizations made after December 31, 2006.
For line 6, a rollover is a tax-free distribution from one traditional, SEP, or SIMPLE IRA that is contributed to another
traditional, SEP, or
SIMPLE IRA. The rollover must be completed within 60 days of receiving the distribution from the first IRA. An outstanding
rollover is any amount
distributed after October 30, 2006, that was rolled over in 2007, but within the 60-day rollover period.
The IRS may waive the 60-day requirement if failing to waive it would be against equity or good conscience, such as situations
where a casualty,
disaster, or other events beyond your reasonable control prevented you from meeting the 60-day requirement. Also, the 60-day
period may be extended if
you had a frozen deposit. See Pub. 590 for details.
Note. Do not include a rollover from a traditional or SEP IRA to a qualified employer plan even if it was an outstanding rollover.
Repayments of qualified hurricane distributions.
Subtract the total amount of repayments of qualified hurricane distributions you made in 2006 from the amount you
would otherwise enter on line 6.
If the result is zero or less, enter -0-.
Example.
You received a $30,000 qualified hurricane distribution (as the result of Hurricane Katrina) on January 20, 2006,
from your traditional IRA. On
December 15, 2006, you made a repayment of $15,000 to your traditional IRA. The value of all your traditional, SEP, and SIMPLE
IRAs as of December 31,
2006, was $50,000. You had no outstanding rollovers. You would enter $35,000 ($50,000 minus the $15,000 repayment) on line
6.
If you received a distribution in 2006 from a traditional, SEP, or SIMPLE IRA, and you also made contributions for 2006 to
a traditional IRA that
may not be fully deductible because of the income limits, you must make a special computation before completing the rest of
this form. For details,
including how to complete Form 8606, see Are Distributions Taxable? in Chapter 1 of Pub. 590.
Do not include any of the following on line 7.
-
Distributions that you converted to a Roth IRA.
-
Recharacterizations.
-
Distributions that you rolled over by December 31, 2006, and any outstanding rollovers included on
line 6.
-
Distributions you rolled over to a qualified employer plan.
-
Qualified charitable distributions. For details, see the instructions for Form 1040, lines 15a and 15b; Form 1040A, lines
11a and 11b; or
Form 1040NR, lines 16a and 16b.
-
Distributions that are treated as a return of contributions under Return of IRA Contributions on page 4.
-
Distributions that are treated as a return of excess contributions under Return of Excess Traditional IRA Contributions on page
4.
-
Distributions of excess contributions due to incorrect rollover information. If an excess contribution in your traditional
IRA is the result
of a rollover from a qualified retirement plan and the excess occurred because the information the plan was required to give
you was incorrect, the
distribution of the excess contribution is not taxable. Attach a statement to your return explaining the distribution and
include the amount of the
distribution on Form 1040, line 15a; Form 1040A, line 11a; or Form 1040NR, line 16a. See Pub. 590 for more details.
-
Distributions that are incident to divorce. The transfer of part or all of your traditional, SEP, or SIMPLE IRA to your spouse
under a
divorce or separation agreement is not taxable to you or your spouse. If this transfer results in a change in the basis of
the traditional IRA of
either spouse, both spouses must file Form 8606 and show the increase or decrease in the amount of basis on line 2. Attach
a statement explaining this
adjustment. Include in the statement the character of the amounts in the traditional IRA, such as the amount attributable
to nondeductible
contributions. Also, include the name and social security number of the other spouse.
Qualified hurricane distributions.
Be sure to include on line 7, all qualified hurricane distributions you received, even if they were later repaid.
If, in 2006, you converted any amounts from traditional, SEP, or SIMPLE IRAs to a Roth IRA, enter on line 8 the net amount
you converted. To figure
that amount, subtract from the total amount converted in 2006 any portion that you recharacterized back to traditional, SEP,
or SIMPLE IRAs in 2006 or
2007 (see Recharacterizations that begins on page 3). Do not take into account related earnings that were transferred with the
recharacterized amount or any loss that occurred while the amount was in the Roth IRA. See item 1 under Reporting recharacterizations on
page 3 for details.
If all your distributions are qualified hurricane distributions, enter the amount from line 15a on line 15b. If you have distributions
unrelated to
Hurricanes Katrina, Rita, and Wilma, as well as qualified hurricane distributions, you will need to multiply the amount on
line 15a by a fraction. The
numerator of the fraction is your total qualified hurricane distributions and the denominator is the amount from Form 8606,
line 7. See the example
below.
Example.
You received a distribution from your traditional IRA (that you did not roll over) in the amount of $30,000 on May
1, 2006, unrelated to Hurricane
Katrina, Rita, or Wilma. On October 15, 2006, you received a qualified hurricane distribution (as the result of Hurricane
Rita) from your traditional
IRA in the amount of $10,000. You would report total distributions of $40,000 on Form 8606, line 7. You would then complete
lines 8 through 14 as
instructed. Form 8606, line 15a, shows an amount of $36,000. You would enter $9,000 ($36,000 x $10,000/$40,000) on line 15b.
You would also enter
$9,000 on Form 8915, line 22.
If you were under age 59½ at the time you received distributions from your traditional, SEP, or SIMPLE IRA, there generally
is an
additional 10% tax on the portion of the distribution that is included in income (25% for a distribution from a SIMPLE IRA
during the first 2 years).
See the Instructions for Form 1040, line 60, or the Instructions for Form 1040NR, line 55.
Part II—2006 Conversions From Traditional, SEP, or SIMPLE IRAs to Roth IRAs
Complete Part II if you converted part or all of your traditional, SEP, or SIMPLE IRAs to a Roth IRA in 2006, excluding any
portion you
recharacterized. See item 1 under Reporting recharacterizations on page 3 for details.
Limit on number of conversions.
If you converted an amount from a traditional, SEP, or SIMPLE IRA to a Roth IRA in 2006 and then recharacterized the
amount back to a traditional,
SEP, or SIMPLE IRA, you cannot reconvert that amount until the later of January 1, 2007, or 30 days after the recharacterization.
See Pub. 590 for
details.
You cannot convert any amount to Roth IRAs in 2006 if (a) your modified AGI for Roth IRA purposes (see page 2) is more than
$100,000, or (b) your
filing status is married filing separately and you lived with your spouse at any time in 2006. If you erroneously made a conversion,
you must
recharacterize the converted amount. See Recharacterizations that begins on page 3.
If you did not complete line 8, see the instructions for that line. Then, enter on line 16 the amount you would have entered
on line 8 had you
completed it.
If you did not complete line 11, enter on line 17 the amount from line 2 (or the amount you would have entered on line 2 if
you had completed that
line) plus any contributions included on line 1 that you made before the conversion.
Part III—Distributions From Roth IRAs
Complete Part III to figure the taxable part, if any, of your 2006 Roth IRA distributions.
Do not include on line 19 any of the following.
-
Distributions that you rolled over, including distributions made in 2006 and rolled over after December 31, 2006 (outstanding
rollovers).
-
Recharacterizations.
-
Distributions that are a return of contributions under Return of IRA Contributions on page 4.
-
Distributions made on or after age 59½ if you made a contribution (including a conversion) for 1998, 1999, 2000, or
2001.
-
Qualified charitable distributions. For details, see the instructions for Form 1040, lines 15a and 15b; Form 1040A, lines
11a and 11b; or
Form 1040NR, lines 16a and 16b.
-
Distributions made upon death or due to disability if you made a contribution (including a conversion) for 1998, 1999, 2000,
or
2001.
-
Distributions that are incident to divorce. The transfer of part or all of your Roth IRA to your spouse under a divorce or
separation
agreement is not taxable to you or your spouse.
Qualified hurricane distributions.
Be sure to include on line 19, all qualified hurricane distributions you received, even if they were later repaid.
If, after considering the items above, you do not have an amount to enter on line 19, do not complete Part III; your Roth
IRA distribution(s) is
not taxable. Instead, include your total Roth IRA distribution(s) on Form 1040, line 15a; Form 1040A, line 11a; or Form 1040NR,
line 16a.
If you had a qualified first-time homebuyer distribution from your Roth IRA and you made a contribution (including a conversion)
to a Roth IRA for
1998, 1999, 2000, or 2001, enter the amount of your qualified expenses on line 20, but do not enter more than $10,000.
Figure the amount to enter on line 22 as follows.
-
If you did not take a Roth IRA distribution before 2006 (other than an amount rolled over or recharacterized or a returned
contribution),
enter on line 22 the total of all your regular contributions to Roth IRAs for 1998 through 2006 (excluding rollovers from
other Roth IRAs and any
contributions that you had returned to you), adjusted for any recharacterizations.
-
If you did take such a distribution before 2006, use the chart on this page to figure the amount to enter.
-
Increase the amount on line 22 by any amount rolled in from a designated Roth account that is treated as investment in the
contract.
-
Increase or decrease the amount on line 22 by any basis transferred or received incident to divorce. Also attach a statement
similar to the
one explained in the last bulleted item under Line 7 on page 6.
Generally, there is an additional 10% tax on 2006 distributions from a Roth IRA that are shown on line 23. The additional
tax is figured on Form
5329, Part I. See the instructions for Form 5329, line 1, for details and exceptions.
Figure the amount to enter on line 24 as follows.
-
If you have never made a Roth IRA conversion, enter -0- on line 24.
-
If you took a Roth IRA distribution (other than an amount rolled over or recharacterized or a returned contribution) before
2006 in excess
of your basis in regular Roth IRA contributions, use the chart above to figure the amount to enter on line 24.
-
If you did not take such a distribution before 2006, enter on line 24 the total of all your conversions to Roth IRAs (other
than amounts
recharacterized). These amounts are shown on line 14c of your 1998, 1999, and 2000 Forms 8606 and line 16 of your 2001 through
2006 Forms
8606.
-
Increase or decrease the amount on line 24 by any basis transferred or received incident to divorce. Also attach a statement
similar to the
one explained in the last bulleted item under Line 7 on page 6.
If all your distributions are qualified hurricane distributions, enter the amount from line 25a on line 25b. If you have distributions
unrelated to
Hurricanes Katrina, Rita, and Wilma, as well as qualified hurricane distributions, you will need to multiply the amount on
line 25a by a fraction. The
numerator of the fraction is your total qualified hurricane distributions and the denominator is the amount from Form 8606,
line 21. See the example
below.
Example.
You received a distribution from your Roth IRA (that you did not roll over) in the amount of $30,000 on May 1, 2006,
unrelated to Hurricane
Katrina, Rita, or Wilma. On October 30, 2006, you received a qualified hurricane distribution (as the result of Hurricane
Wilma) from your Roth IRA in
the amount of $10,000. You would report total distributions of $40,000 on Form 8606, line 19. You have no first-time homebuyer
expenses reported on
line 20, so you would also enter $40,000 on line 21. You would then complete lines 22 through 24 as instructed. Form 8606,
line 25a, shows an amount
of $20,000. You would enter $5,000 ($20,000 x $10,000/$40,000) on line 25b. You would also enter $5,000 on Form 8915, line
23.
Basis in Regular Roth IRA Contributions—Line 22
| IF the most recent year prior to 2006 in which you took a Roth IRA distribution*
was... |
THEN enter on Form 8606, line 22, this amount... |
PLUS the total of all your regular contributions** to Roth IRAs for... |
2005
(you had an amount on your Form 8606, line 19)
|
The excess of your 2005 Form 8606, line 22, over line 19 of that Form 8606.
|
2006
|
2004
(you had an amount on your Form 8606, line 19)
|
The excess of your 2004 Form 8606, line 22, over line 19 of that Form 8606.
|
2005 and 2006
|
2003
(you had an amount on your 2003 Form 8606, line 19)
|
The excess of your 2003 Form 8606, line 20, over line 19 of that Form 8606.
|
2004 through 2006
|
2002
(you had an amount on your 2002 Form 8606, line 19)
|
The excess of your 2002 Form 8606, line 20, over line 19 of that Form 8606.
|
2003 through 2006
|
2001
(you had an amount on your 2001 Form 8606, line 19)
|
The excess of your 2001 Form 8606, line 20, over line 19 of that Form 8606.
|
2002 through 2006
|
2000
(you had an amount on your 2000 Form 8606,
line 17)
|
The excess of your 2000 Form 8606, line 18d, over line 17 of that Form 8606.
|
2001 through 2006
|
1999
(you had an amount on your 1999 Form 8606,
line 17)
|
The excess of your 1999 Form 8606, line 18d, over line 17 of that Form 8606.
|
2000 through 2006
|
1998
(you had an amount on your 1998 Form 8606,
line 18)
|
The excess of your 1998 Form 8606, line 19c, over line 18 of that Form 8606.
|
1999 through 2006
|
|
Did not take a Roth IRA distribution* prior to 2006
|
$0
|
1998 through 2006
|
|
*Excluding rollovers, recharacterizations, and contributions that you had returned to
you.
|
|
**Excluding rollovers, conversions, Roth IRA contributions that were recharacterized,
and any contributions that you had returned to you.
|
Basis in Roth IRA Conversions—Line 24
| IF the most recent year prior to 2006 in which you had a
distribution* in excess of your basis in contributions was... |
THEN enter on Form 8606, line 24, this amount... |
PLUS the sum of the amounts on the following lines... |
2005
(your 2005 Form 8606, line 22, was less than line 19 of that Form 8606)
|
The excess, if any, of your 2005 Form 8606, line 24, over line 23** of that Form 8606.
|
Line 16 of your 2006 Form 8606
|
2004
(your 2004 Form 8606, line 22, was less than line 19 of that Form 8606)
|
The excess, if any, of your 2004 Form 8606, line 24, over line 23** of that Form 8606.
|
Line 16 of your 2005 and 2006 Forms 8606
|
2003
(you had an amount on your 2003 Form 8606, line 21)
|
The excess, if any, of your 2003 Form 8606, line 22, over line 21 of that Form 8606.
|
Line 16 of your 2004 through 2006 Forms 8606
|
2002
(you had an amount on your 2002 Form 8606, line 21)
|
The excess, if any, of your 2002 Form 8606, line 22, over
line 21 of that Form 8606.
|
Line 16 of your 2003 through 2006
Forms 8606
|
2001
(you had an amount on your 2001 Form 8606, line 21)
|
The excess, if any, of your 2001 Form 8606, line 22, over
line 21 of that Form 8606.
|
Line 16 of your 2002 through 2006
Forms 8606
|
2000
(you had an amount on your 2000 Form 8606,
line 19)
|
The excess, if any, of your 2000 Form 8606, line 25, over
line 19 of that Form 8606.
|
Line 16 of your 2001 through 2006 Forms 8606
|
1999
(you had an amount on your 1999 Form 8606,
line 19)
|
The excess, if any, of your 1999 Form 8606, line 25, over
line 19 of that Form 8606.
|
Line 14c of your 2000 Form 8606 and line 16 of your 2001 through 2006
Forms 8606
|
1998
(you had an amount on your 1998 Form 8606,
line 20)
|
The excess, if any, of your 1998 Form 8606, line 14c, over
line 20 of that Form 8606.
|
Line 14c of your 1999 and 2000 Forms 8606 and line 16 of your 2001
through 2006 Forms 8606
|
|
Did not have such a distribution in excess of your basis in
contributions
|
The amount from your 2006 Form 8606, line 16.
|
Line 14c of your 1998, 1999, and 2000 Forms 8606 and line 16 of your
2001 through 2005 Forms 8606
|
|
*Excluding rollovers, recharacterizations, and contributions that you had returned to you.
|
|
**Refigure line 23 without taking into account any amount entered on Form 8606, line
20.
|
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