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No need to report Roth IRA contributions

by on
in Small Business Tax

Q: My tax preparer said I didn't need to enter my Roth IRA contribution on my tax return. It seems odd that I wouldn't have to tell the IRS about this. Is he right? E.M., Madison, Wis.

A: Yes, he is. Unlike traditional IRA contributions, you don't report Roth IRA contributions on your tax return. That's because you can never deduct contributions to your Roth IRA. But withdrawals of earnings from your Roth could possibly be taxable if they aren't "qualified" withdrawals. Your financial institution will report the taxable amount to the IRS and you must enter it on your return. Tip: The contribution limit for both traditional and Roth IRAs is $4,000 for 2005; $4,500 if you're age 50 or over.

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