Children Non-Deductible Traditional IRA Contributions

Forum|Forum|2 years ago
July 26, 2023
1 reply
28 views

Hi,

Do children (who are under the threshold of income required to file tax returns) need to file tax returns if they recieved non-deductible traditional IRA contributions?

Individual

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Best answer by TaxGuyBill

Hi,

When you "re-characterize" the contribution are there any tax forms or steps that need to be followed?

Not for the tax preparer. The taxpayer just needs to ask the IRA custodian to "recharacterize" the contributions (it is possible the IRA custodian will have some forms for them to verify that is what they want).

T

TaxGuyBill

Level 15

Did they "receive" or did they "make" IRA contributions?

Non-deductible Traditional IRA? Are you sure they did not make a Roth contribution? I think a Traditional IRA is automatically deductible unless you make an election to treat it as non-deductible (and I don't know why they would do that rather than make a Roth contribution).

T

Tax ExplorerAuthor

Level 5

The child recieved IRA contributions from her father. From my understanding, any non-deductible Traditional IRA contributions made would allow future distributions from the non-deductible contributions to be non-taxable.

Would the child still need to file tax return (specifically Form 8606) to report the non-deductible Traditional IRA contributions even if they are not required to file tax return for the year?

T

TaxGuyBill

Level 15

A person can not "receive" an IRA contribution. What EXACTLY happened? Are you saying the father put in own money into an IRA account that had the child's name? If so, it is treated as if the child "made" the contribution (he didn't "receive" it).

Did the have enough "taxable compensation" (such as W-2 wages or self employment profit) that he was allowed to make the IRA contribution?

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