1 Maximum IRA deduction for the current year 1 2 IRA contributions for the

1 maximum ira deduction for the current year 1 2 ira

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contributions from prior years you can deduct this year. 1. Maximum IRA deduction for the current year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. 2. IRA contributions for the current year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 3. Subtract line 2 from line 1. If zero (0) or less, enter zero . . . . . . . . . . . . . . . . . . . . . . . 3. 4. Excess contributions in IRA at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. 5. Enter the lesser of line 3 or line 4. This is the amount of excess contributions for previous years that you can deduct this year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. Example. Teri was entitled to contribute to her tradi- tional IRA and deduct $1,000 in 2015 and $1,500 in 2016 (the amounts of her taxable compensation for these years). For 2015, she actually contributed $1,400 but could deduct only $1,000. In 2015, $400 is an excess con- tribution subject to the 6% tax. However, she would not have to pay the 6% tax if she withdrew the excess (includ- ing any earnings) before the due date of her 2015 return. Because Teri did not withdraw the excess, she owes ex- cise tax of $24 for 2015. To avoid the excise tax for 2016, she can correct the $400 excess amount from 2015 in 2016 if her actual contributions are only $1,100 for 2016 (the allowable deductible contribution of $1,500 minus the $400 excess from 2015 she wants to treat as a deductible Worksheet 1-6. Page 38 Chapter 1 Traditional IRAs
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contribution in 2016). Teri can deduct $1,500 in 2016 (the $1,100 actually contributed plus the $400 excess contri- bution from 2015). This is shown on Worksheet 1-6. Ex- ample—Illustrated next. Worksheet 1-6. Example—Illustrated Use this worksheet to figure the amount of excess contributions from prior years you can deduct this year. 1. Maximum IRA deduction for the current year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. 1,500 2. IRA contributions for the current year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 1,100 3. Subtract line 2 from line 1. If zero (0) or less, enter zero . . . . . . . . . . . . . . . . . . . . . . . 3. 400 4. Excess contributions in IRA at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. 400 5. Enter the lesser of line 3 or line 4. This is the amount of excess contributions for previous years that you can deduct this year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. 400 Closed tax year. A special rule applies if you incorrectly deducted part of the excess contribution in a closed tax year (one for which the period to assess a tax deficiency has expired). The amount allowable as a traditional IRA deduction for a later correction year (the year you contrib- ute less than the allowable amount) must be reduced by the amount of the excess contribution deducted in the closed year. To figure the amount of excess contributions for previ- ous years that you can deduct this year if you incorrectly deducted part of the excess contribution in a closed tax year, see Worksheet 1-7 next. Excess Contributions Deductible This Year if Any Were Deducted in a Closed Tax Year Use this worksheet to figure the amount of excess contributions for prior years that you can deduct this year if you incorrectly deducted excess contributions in a closed tax year. 1. Maximum IRA deduction for the current year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. 2. IRA contributions for the current year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 3. If line 2 is less than line 1, enter any excess contributions that were deducted in a closed tax year. Otherwise, enter zero (0) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. 4. Subtract line 3 from line 1 . . . . . . . . . . . . . . 4. 5. Subtract line 2 from line 4. If zero (0) or less, enter zero . . . . . . . . . . . . . . . . . . . . . . . 5. 6. Excess contributions in IRA at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. 7. Enter the lesser of line 5 or line 6. This is
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