OMB No. 1545-1007 Nondeductible IRAs

(Contributions, Distributions, and Basis) Form 8606

© Please see What Records Must I Keep? on page 2. Department of the Treasury

Internal Revenue Service

Attachment

© Attach to Form 1040, Form 1040A, or Form 1040NR. Sequence No. 47

Name. If married, file a separate Form 8606 for each spouse who is required to file Form 8606. See instructions. Your social security number

Home address (number and street, or P.O. box if mail is not delivered to your home) Apt. no. Fill in Your Address Only

If You Are Filing This

Form by Itself and Not

With Your Tax Return

City, town or post office, state, and ZIP code

1

1 Enter your IRA contributions for 1996 that you choose to be nondeductible. Include those made during

1/1/97–4/15/97 that were for 1996. See instructions

2 Enter your total IRA basis for 1995 and earlier years. See instructions 2

3 Add lines 1 and 2

4

3

Enter only those contributions included on line 1 that were made during 1/1/97–4/15/97. This amount

will be the same as line 1 if all of your nondeductible contributions for 1996 were made in 1997 by

4/15/97. See instructions

5

4

Subtract line 4 from line 3 5

6 Enter the total value of ALL your IRAs as of 12/31/96 plus any outstanding

rollovers. See instructions

7

7

Enter the total IRA distributions received during 1996. Do not include

amounts rolled over before 1/1/97. See instructions

8 8

9

Add lines 6 and 7

9

3 .

10

Divide line 5 by line 8 and enter the result as a decimal (to at least two

places). Do not enter more than “1.00”

10 Multiply line 7 by line 9. This is the amount of your nontaxable distributions for 1996

11 11

12

Subtract line 10 from line 5. This is the basis in your IRA(s) as of 12/31/96

12

13

13

Add lines 4 and 11. This is your total IRA basis for 1996 and earlier years

Under penalties of perjury, I declare that I have examined this form, including accompanying attachments, and to the best of my

knowledge and belief, it is true, correct, and complete. Sign Here Only If You

Are Filing This Form

by Itself and Not With

Your Tax Return © Your signature © Date

Paperwork Reduction Act

Notice

General Instructions

The time needed to complete and file

this form will vary depending on individual

circumstances. The estimated average time

is: Recordkeeping, 26 min.; Learning

about the law or the form, 7 min.;

Preparing the form, 21 min.; and

Copying, assembling, and sending the

form to the IRS, 20 min.

Purpose of Form

If you have comments concerning the

accuracy of these time estimates or

suggestions for making this form simpler,

we would be happy to hear from you. See

the instructions for the tax return with

which this form is filed.

Cat. No. 63966F Form 8606 (1996)

Did you receive

any IRA

distributions

(withdrawals)

in 1996?

No

Yes

Enter the amount from line 3 on

line 12. Then, stop and read When

and Where To File on page 2.

Go to line 4.

Taxable Distributions for 1996

Subtract line 10 from line 7. Enter the result here and on Form 1040, line 15b; Form 1040A, line 10b;

or Form 1040NR, line 16b, whichever applies

©

©

6

Also use Form 8606 to figure the basis

in your IRA(s) and the taxable part of any

distributions you received in 1996 if you

have ever made nondeductible

contributions.

Your basis is the total of all your

nondeductible IRA contributions minus the

total of all nontaxable IRA distributions

received. It is to your advantage to keep

track of your basis because it is used to

figure the nontaxable part of future

distributions.

Use Form 8606 to report your IRA

contributions that you choose to be

nondeductible. For example, if you cannot

deduct all of your contributions because of

the income limits for IRAs, you may want

to make nondeductible contributions.

Note: To figure your deductible IRA

contributions, see the Instructions for Form

1040, or Form 1040A, whichever applies.

Contributions, Nontaxable Distributions, and Basis

We ask for the information on this form to

carry out the Internal Revenue laws of the

United States. You are required to give us

the information. We need it to ensure that

you are complying with these laws and to

allow us to figure and collect the right

amount of tax.

Section references are to the Internal

Revenue Code.

96

You are not required to provide the

information requested on a form that is

subject to the Paperwork Reduction Act

unless the form displays a valid OMB

control number. Books or records relating

to a form or its instructions must be

retained as long as their contents may

become material in the administration of

any Internal Revenue law. Generally, tax

returns and return information are

confidential, as required by section 6103.

Who Must File

● You made nondeductible contributions

to your IRA for 1996, or

● You received IRA distributions in 1996

and you have ever made nondeductible

contributions to any of your IRAs.

You must file Form 8606 for 1996 if:
Form 8606 (1996) Page 2

Example. You made contributions of

$1,000 in 1996 and $1,000 in 1997 of

which $1,500 are deductible and $500 are

nondeductible. You choose $500 of your

contribution in 1996 to be nondeductible.

In this case, the $500 would be entered on

line 1, but not on line 4, and would

become part of your basis for 1996. ● Forms 1099-R and W-2P received for

each year you received a distribution.

Line 5

Additional Information

If none of your contributions are

deductible, you may choose to make

nondeductible contributions up to $2,000

(but not more than your earned income).

Enter on line 1 of Form 8606 your

contributions that you choose to make

nondeductible.

Line 6

Amending Form 8606

Line 7

Specific Instructions

Note: If you received an IRA distribution in

1996 and you also made IRA contributions

for 1996 that may not be fully deductible

because of the income limits, you need to

make a special computation before

completing this form. For details, including

how to complete Form 8606, see Tax

Treatment of Distributions in Chapter 6

of Pub. 590.

If you used IRA Worksheet 1 in the

Form 1040 or Form 1040A instructions

but choose not to deduct the full amount

shown on line 3 of that worksheet,

subtract the amount you are deducting

from the amount on line 3. Enter the result

on line 1 of your Form 8606.

Name and Social Security Number

Line 1

Line 2

If you used IRA Worksheet 2 in the Form

1040 or Form 1040A instructions, include

the following on line 1 of Form 8606.

Line 11

Line 4

Penalty for Overstatement

Note: Enter any nondeductible

contributions for your nonworking spouse

from the appropriate lines of IRA

Worksheet 2 on line 1 of your spouse’s

separate Form 8606.

Penalty for Not Filing

● Forms 5498 or similar statements

received each year showing contributions

you made.

● Forms 5498 or similar statements

received showing the value of your IRA(s)

for each year you received a distribution.

● Page 1 of Forms 1040 (or Forms 1040A,

1040NR, or 1040-T) filed for each year you

make a nondeductible contribution.

If you are required to file Form 8606 but do

not do so, you will have to pay a $50

penalty for each failure to file this form

unless you can show reasonable cause.

If you overstate your nondeductible

contributions for any tax year, you must

pay a $100 penalty for each overstatement

unless it was due to reasonable cause.

For more details on nondeductible

contributions, IRA basis, and distributions,

get Pub. 590, Individual Retirement

Arrangements (IRAs).

After you file your return, you may change

a nondeductible contribution made on a

prior year’s return to a deductible

contribution or vice versa. To do this,

complete a new Form 8606 showing the

revised information and attach it to Form

1040X, Amended U.S. Individual Income

Tax Return. Send both of these forms to

the Internal Revenue Service Center for

your area as shown in the Form 1040X

instructions.

If you file a joint return on Form 1040, or

Form 1040A, enter the name and social

● The amount shown on line 10 of IRA

Worksheet 2 (Form 1040) or line 8 of IRA

Worksheet 2 (Form 1040A) that you

choose to make nondeductible.

● The part, if any, of the amount shown on

line 9 of IRA Worksheet 2 (Form 1040) or

line 7 of IRA Worksheet 2 (Form 1040A)

that you choose to make nondeductible.

You cannot take a deduction for the part

included on line 1.

If contributions were also made to your

nonworking spouse’s IRA, you may choose

to make nondeductible contributions up to

$2,250 (but not more than your earned

income). Enter on line 1 of your Form 8606

the total nondeductible contributions you

are making to your IRA. Enter the balance

on line 1 of your nonworking spouse’s

Form 8606. Do not enter more than $2,000

on either your or your spouse’s Form 8606.

Also, the total of the two amounts cannot

be more than $2,250.

If contributions were made to your

nonworking spouse’s IRA but you choose

not to deduct the full amount shown on

line 8 of IRA Worksheet 1, subtract the

amount you are deducting for your

nonworking spouse from the amount on

line 8. Enter the result on line 1 of your

nonworking spouse’s Form 8606.

● Distributions received in 1996 and rolled

over to another IRA by 12/31/96,

● Outstanding rollovers included on line 6,

● Contributions under section 408(d)(4)

returned to you on or before the due date

of the return, or

● Excess contributions under section

408(d)(5) returned to you after the due date

of the return.

If this is the first year you are required to

file Form 8606, enter zero. If you filed a

1995, 1994, or 1993 Form 8606, enter the

amount from line 12 of the last Form 8606

you filed. If you did not file a 1995, 1994,

or 1993 Form 8606 but you filed a Form

8606 for any other year after 1988, enter

the amount from line 14 of the last Form

8606 you filed. Otherwise, enter the total of

the amounts from lines 7 and 16 of your

1988 Form 8606. Or, if you didn’t file a

1988 Form 8606, enter the total of the

amounts from lines 4 and 13 of your 1987

Form 8606.

If you made contributions in 1996 and

1997 that are for 1996, you may choose to

apply the contributions made in 1996 first

to nondeductible contributions and then to

deductible contributions, or vice versa. But

the amount on line 1 minus the amount on

line 4 cannot be more than the IRA

contributions you actually made in 1996.

Although the 1996 IRA contributions you

made during 1/1/97–4/15/97 (line 4) can be

treated as nondeductible for purposes of

line 1, they are not included in your basis

for purposes of figuring the nontaxable

part of any distributions you received in

1996. This is why you subtract line 4 from

line 3.

Enter the total value of ALL your IRAs as

of 12/31/96 plus any outstanding rollovers.

You should receive a statement by 1/31/97

for each IRA account showing the value on

12/31/96. A rollover is a tax-free

distribution from one IRA that is

contributed to another IRA. The rollover

must be completed within 60 days of

receiving the distribution from the first IRA.

An outstanding rollover is any amount

distributed to you from one IRA within 60

days of the end of 1996 (between Nov. 2

and Dec. 31) that you did not roll over to

another IRA by 12/31/96, but that you roll

over to another IRA in 1997 within the

normal 60-day rollover period.

Do not include on line 7:

This is the total of your nondeductible IRA

contributions made in 1996 and earlier

years minus the total of any nontaxable

IRA distributions received in those years.

When and Where To File

If you are required to file Form 8606 but

you are not required to file an income tax

return, you still must file Form 8606. Send

it to the Internal Revenue Service at the

same time and place you would otherwise

file Form 1040, 1040A, or 1040NR.

Attach Form 8606 to your 1996 Form

1040, 1040A, or 1040NR.

Line 12

This amount will be used on Form 8606

in future years if you make nondeductible

IRA contributions or receive distributions.

This is the total of your IRA basis as of

12/31/96 and any nondeductible IRA

contributions for 1996 that you made in

1997 by 4/15/97.

What Records Must I Keep?

To verify the nontaxable part of

distributions from your IRA, keep a copy of

this form together with copies of the

following forms and records until all

distributions are made from your IRA(s):

security number of the spouse whose IRA

information is shown.