funding a Roth for 2006

[crabbypatty]

After having our taxes done we learned we are getting back a large refund (yes we'll adjust w/holdings for next year) The taxes are sent in already so I can't change them. I figured I'd partially fund a Roth for 2006 and 2007 with the return.

But how does this affect the tax return that I already sent in for 2006?

[RJB1180]

Re: funding a Roth for 2006

you need to file an amended return for 2006 (http://www.irs.gov/faqs/faq1-3.html)
check to see if you qualify for saver's credit (http://www.irs.gov/publications/p590/index.html) which could increase your refund even more

[pearlieq]

Re: funding a Roth for 2006

Unless I'm missing something, why would a Roth affect your tax return? They're funded with after-tax money.

[crabbypatty]

Re: funding a Roth for 2006

Unless I'm missing something, why would a Roth affect your tax return? They're funded with after-tax money.

That was my question, whether it would affect them or not. I guess the answer is that funding a Roth wouldn't affect the tax returns after all.

[MonkeyMama]

Re: funding a Roth for 2006

You could always amend a tax return, but no need to for a ROTH contribution.

I would just be concerned that you really qualify is all. Usually your tax preparer or software will tell you how much you can contribute based on your income and situation.

[sweeps]

Re: funding a Roth for 2006

There shouldn't need to amend your return unless you did something strange like exceed the maximum annual IRA contribution, or if -- perhaps that is what RJB was referring to -- you became eligible for the Saver's Credit and wanted to claim it.

[bjl584]

Re: funding a Roth for 2006

There is a saving credit available to people funding a traditional IRA if you make up to a certain adjusted income level. I don't believe that there are any tax consequenses positive or negative to funding a ROTH. It is funded after taxes, so it is not going to affect your taxes in any way as far as filing goes or your refund amount is concerned.

[sweeps]

Re: funding a Roth for 2006

There is a saving credit available to people funding a traditional IRA if you make up to a certain adjusted income level.

It also applies to Roth contributions.

[crabbypatty]

Re: funding a Roth for 2006

You could always amend a tax return, but no need to for a ROTH contribution.

I would just be concerned that you really qualify is all. Usually your tax preparer or software will tell you how much you can contribute based on your income and situation.

We are well below the 150k income limit for joint filers. Is that what you mean?

[jIM_Ohio]

Re: funding a Roth for 2006

You will need to amend the 2006 return to tell IRS you contributed (there is a place in Turbo Tax where it asks that question is the basis for my answer).

I think this is so the ORS knows in 2007 you didn't contribute more than the 4k allowed (assuming your 2006+2007 contributions exceed 4k).

[sweeps]

Re: funding a Roth for 2006

Turbo Tax only asks you how much you contributed so it can (a) confirm that you don't owe any penalties due to ineligibility or excess contributions, (b) see if you're eligible for the Saver's Credit, and (c) offer personal finance tips for next year if you choose that option. I'm not aware of any requirement to report normal Roth contributions on your taxes.

[RJB1180]

Re: funding a Roth for 2006

please read the saver's credit publication as well as the ROTH IRA publication from the Irs, they clearly explain what to do where.

If not consult your tax preparer

[kv968]

Re: funding a Roth for 2006

I figured I'd partially fund a Roth for 2006 and 2007 with the return.

But how does this affect the tax return that I already sent in for 2006?

Funding a Roth won't affect your tax return since it's not deductible. The question I have is are you "partially" funding a Roth for 2006? If so, you should fully fund it for 2006 and put whatever's left in for 2007. You only have until, I believe it's April 16th or 17th this year, to contribute for 2006 whereas you have the rest of the year to add to the 2007 contributions.

[crabbypatty]

Re: funding a Roth for 2006

Funding a Roth won't affect your tax return since it's not deductible. The question I have is are you "partially" funding a Roth for 2006? If so, you should fully fund it for 2006 and put whatever's left in for 2007. You only have until, I believe it's April 16th or 17th this year, to contribute for 2006 whereas you have the rest of the year to add to the 2007 contributions.

So it makes sense to fund as much of 2006 as I can b/c of the limited time frame. Then start funding 2007's contributions?

I think I'll just let my tax preparer know next year at tax time. He'll be able to fill it all out for me. After all, that's what he's paid for, right.

[kv968]

Re: funding a Roth for 2006

So it makes sense to fund as much of 2006 as I can b/c of the limited time frame. Then start funding 2007's contributions

That's what I would do. Once the opportunity passes, April 16th or 17th, you won't be able to contribute to 2006. Who knows what will happen over the course of 2007? You may end up with more than enough to fully fund it for 2007 by the end of the year and you won't be able to go back.