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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12021
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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IRA catch-up contributions. My employer checked box 13 on my

Customer Question

IRA catch-up contributions. My employer checked box 13 on my W2. We have a 401 plan available that I have never participated in. I want to make a tax deductible catch up contribution to my IRA. He suggested I use form 8275 to explain. Should I?
JA: Thanks. Can you give me any more details about your issue?
Customer: I am filing with a catch up, tax deductible contribution to my IRA. Box 13 on my W2 was checked. I have available a 401 plan at work which I have never participated in. Do I need form 8275 to explain?
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Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

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Yes, this is the best way pre-empt an audit or information request (to give IRS full disclosure and explain your position and the nature of your claim)

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Just be sure that you understand the rules under "coverage" under a workplace plan.

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If ANY money was contributed in an account on your behalf (whether YOU contributed or not) you were covered, and then the income rules will dictate whether some or all of you IRA deduction is deductible.

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One of the ways this can happen is through a profit sharing contribution to a 401(k)

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Can also happen when there's an allocation formula for the profit sharing or other component of the plan where, when someone leaves before being fully vested, money gets allocated back to all employees.

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For purposes of "workplace qualified plan coverage" and deductibility of IRA's, you don't necessarily have to have contributed your OWN money.

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BUT, again, if you're sure of that, 8275 IS the way to pre-empt problems

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Lane

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I hold a JD (Juris Doctorate, a doctoral degree in the law), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security & Medicare, estate, corporate & tax advice since 1986

Expert:  Lane replied 1 year ago.

By the way - Here's the IRS table that shows what income can be, even WITH retirement plan coverage, and the IRS contribution still be deductible

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Lane

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Customer: replied 1 year ago.
I had no contribution, and neither did my employer contribute. I have no account.
Expert:  Lane replied 1 year ago.

Then the 8725 is the right way to do this if the employer won't correct the form.

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Expert:  Lane replied 1 year ago.

See this from IRS:

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here: https://www.irs.gov/Retirement-Plans/Are-You-Covered-by-an-Employer's-Retirement-Plan%3F

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Are You Covered by an Employer's Retirement Plan?

You’re covered by an employer retirement plan for a tax year if your employer (or your spouse’s employer) has a:

  • Defined contribution plan (profit-sharing, 401(k), stock bonus and money purchase pension plan) and any contributions or forfeitures were allocated to your account for the plan year ending with or within the tax year;
  • IRA-based plan (SEP, SARSEP or SIMPLE IRA plan) and you had an amount contributed to your IRA for the plan year that ends with or within the tax year; or
  • Defined benefit plan (pension plan that pays a retirement benefit spelled out in the plan) and you are eligible to participate for the plan year ending with or within the tax year.

Box 13 on the Form W-2 you receive from your employer should contain a check in the “Retirement plan” box if you are covered. If you are still not certain, check with your (or your spouse’s) employer.

The limits on the amount you can deduct don’t affect the amount you can contribute. However, you can never deduct more than you actually contribute.

Expert:  Lane replied 1 year ago.

Form 8275 has LONG been touted by tax attorneys and other professionals as the way to audit-proof a return, when something that is being reported, won't reconcile with the system

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Hope this helps

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If you don't have other questions, I'd really appreciate a positive rating (using the , faces, or stars on your screen, and then clicking “submit”)

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That’s the only way JustAnswer will credit us for the work here.

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Thanks

Expert:  Lane replied 1 year ago.

Hi,

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I’m just checking back in to see how things are going.

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Did my answer help?

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Let me know…

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Thanks

Lane