Where Do You Put IRA Contributions on Your Tax Return?

Saving for retirement through an Individual Retirement Account (IRA) offers tax benefits, but correctly reporting contributions on your tax return is essential to avoid missed deductions or penalties. Understanding where and how to enter IRA contributions ensures compliance with IRS rules and maximizes tax advantages.

Traditional IRA Reporting

Contributions to a Traditional IRA may be tax-deductible, depending on income and workplace retirement plans. The annual contribution limit for 2024 is $7,000 for individuals under 50 and $8,000 for those 50 and older, including catch-up contributions. These limits apply across both Traditional and Roth IRAs combined, and exceeding them results in penalties.

Deductibility depends on modified adjusted gross income (MAGI) and employer-sponsored retirement plan coverage. In 2024, single filers with a workplace plan see deductions phase out between $77,000 and $87,000. For married couples filing jointly, the phase-out range is $123,000 to $143,000 if the contributing spouse is covered. If only one spouse is covered, the phase-out extends from $230,000 to $240,000. Those below these ranges can deduct the full contribution, while those above them receive no deduction but can still contribute.

Deductible contributions are reported on Schedule 1 of Form 1040, line 20, reducing adjusted gross income. IRA custodians report contributions to the IRS on Form 5498, which taxpayers do not need to attach to their return but should keep for records. Nondeductible contributions require Form 8606 to track basis and prevent double taxation upon withdrawal.

Roth IRA Reporting

Roth IRA contributions are made with after-tax dollars, providing no immediate deduction, but earnings grow tax-free, and qualified withdrawals are not taxed. Contributions can be withdrawn anytime without tax or penalty, making accurate record-keeping essential.

Income limits apply to Roth IRA contributions. In 2024, single filers with a MAGI over $146,000 see contribution limits phase out, with a complete cutoff at $161,000. For married couples filing jointly, the phase-out range is $230,000 to $240,000. Those exceeding these limits cannot contribute directly but may use a backdoor Roth IRA strategy, which involves contributing to a Traditional IRA and converting it. If pre-tax funds are involved, the pro-rata rule determines the taxable portion of the conversion.

Although Roth IRA contributions are not reported on Form 1040, financial institutions document them on Form 5498, sent to both the account holder and the IRS. This form helps track contributions and conversions to ensure withdrawals in retirement are properly categorized. Excess contributions must be corrected to avoid a 6% excise tax under Internal Revenue Code (IRC) Section 4973, which applies annually until the excess is removed.

Where to Enter IRA Contributions on Federal Forms

Reporting IRA contributions correctly depends on the account type and tax benefits. Deductible Traditional IRA contributions lower taxable income and must be recorded on Schedule 1 of Form 1040, line 20.

Eligible taxpayers may also claim the Saver’s Credit, which benefits low- to moderate-income earners contributing to retirement accounts. Contributions are entered on Form 8880, with the credit worth up to 50% of contributions. In 2024, the maximum income to claim any portion of the credit is $76,500 for married couples filing jointly, $57,375 for heads of household, and $38,250 for single filers. Unlike a deduction, this credit directly reduces tax owed.

IRA custodians report contributions on Form 5498, sent to account holders by May 31 of the following year. This form does not need to be submitted with a tax return but helps track rollovers and conversions. Rollovers from a 401(k) or another retirement plan into an IRA must be reported on Form 1040, typically on lines 5a and 5b, with taxable amounts noted separately. Even direct rollovers with no taxable income should be reported to ensure IRS records match.

Handling Excess Contributions

Exceeding the annual IRA contribution limit results in a 6% excise tax on the excess amount under IRC Section 4973, applied each year until the excess is removed.

To correct an excess contribution, the surplus and any earnings must be withdrawn before the tax filing deadline, including extensions. Earnings on the excess are subject to income tax and may incur a 10% early withdrawal penalty under IRC Section 72(t) if the account holder is under 59½. The custodian issues Form 1099-R to reflect the distribution, and the withdrawn earnings must be reported as taxable income in the year they were removed.

If the deadline passes without correction, the excess remains in the account and continues to incur the 6% penalty annually. Alternatively, the excess can be carried forward by reducing future contributions, but this only works if future contribution room is available. The adjustment must be reported on Form 5329, which calculates the excise tax owed.