Are Monthly Payments to a Roth IRA Reported on Taxes?

Roth IRA contributions aren't tax deductible.

Roth IRA contributions aren't tax deductible.

Generally, monthly contributions to a Roth individual retirement account won't show up on your income tax return. Contributing to a Roth IRA usually offers only long-term benefits, but your monthly contributions might qualify you for the retirement savings credit. However, the credit is only available if your income is low enough.

Roth Contributions Nondeductible

Roth IRA contributions aren't deductible on your income taxes, because the Roth is an after-tax account. This means that instead of getting an income tax deduction for your contributions, you get to take qualified distributions from the account tax-free. As a result, you don't report your Roth IRA contributions on your return like you would your deductible traditional IRA contributions.

Retirement Savings Credit Eligibility

You may, however, use your Roth IRA contributions to qualify for the retirement savings credit. To qualify, you must be older than 18, not a full-time student for five or more months during the year and have your income fall below the annual limits for your filing status. The income limits adjust annually for inflation and are published in IRS Publication 590.

Size of Credit

The retirement savings credit equals up to 50 percent of your retirement plan contributions, including your monthly payments to your Roth IRA. Depending on your income, your credit might be limited to only 10 or 20 percent of the available credit. In addition, you can only count up to $2,000 of contributions and the credit is capped at a maximum of $1,000 per person each year. If you're filing a joint return, each spouse can claim a credit of up to $1,000 for a total of $2,000. To do so, each spouse has to have made contributions. For example, if the husband has $4,000 of contributions and the wife has $0, the maximum credit would be $1,000.

Tax Reporting

To claim the credit, you must calculate it using form 8880. Then, you have to use either Form 1040 or Form 1040A to file your return. If you use Form 1040A, the credit goes on line 32. If you use Form 1040, the credit goes on line 50. Technically, since you use Form 8880 to figure the credit, your monthly Roth IRA contributions still won't show up on your Form 1040 tax return, but they'll help you get a few extra dollars back in your refund.


About the Author

Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."

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