If you are single and earn less than $137,000 a year, or married filing jointly and earn less than $203,000, you can open a Roth IRA during the year. A Roth IRA lets you save for retirement and offers several tax advantages over a traditional IRA. As of 2019, you can contribute up to $6,000 per year if you are under age 50 and $7,000 once over 50. In most cases, you do not report a Roth contribution on your 1040.
TL;DR (Too Long; Didn't Read)
Unless you rollover a traditional IRA to Roth IRA, you generally do not need to report Roth IRA contributions on a 1040.
Traditional Vs. Roth
One of the major differences between a traditional IRA and a Roth IRA becomes evident when you pay taxes on the contribution. A Roth IRA is not tax deductible when you make the contribution. That means you cannot subtract the amount you contribute from your tax return. In exchange, you can withdraw the amount tax-free when you reach 59 1/2-years-old. You also get to take out your earnings tax free.
Depending on circumstances, traditional IRAs may prove deductible, but you pay taxes on both your contributions and earnings in retirement. While you can contribute to a traditional IRA whether or not you have an employee-sponsored retirement plan, such as a 401(k), you can only deduct contributions on your income tax return for that year if you are not covered by such a plan or you make less than IRS limits for such deductions.
Line 4a on Your 1040
If you look over the 1040 form, you'll notice that line 4a is for an "IRAs, pensions and annuities." Line 4a is only for traditional IRA deductions. You cannot use it to deduct your Roth IRA contribution from your tax return.
The IRS also has specific rules about deducting traditional IRA contributions. For example, if you have a retirement plan from your employer, such as a 401(k), you can't deduct your traditional IRA on line 4a if you earn more than $74,000 and are single as of 2019.
Retirement Savings Contribution Credit
You might be able to report your Roth IRA contributions on form 1040 if you can claim the Retirement Savings Contribution Credit, or the Saver's Credit. The Saver's Credit is for people who earn less than $19,250 if single or $38,500 if married and filing jointly as of 2019.
The credit isn't the same as deducting the Roth contribution. Instead, you receive a tax credit of up to 50 percent of your contribution, or up to $1,000, based on your income. The higher your income, the lower the credit.
Rollover to Roth
If you roll over a traditional IRA to a Roth IRA during the year, you do need to report the amount of the rollover on your 1040. Since you were able to deduct the amount of the traditional IRA from your taxes the year you contributed, you now have to pay the taxes on the amount when you convert it to a Roth IRA. Report the amount on line 15b of the 1040. You might also need to complete form 8606 if any of the contributions to a traditional IRA were not tax deductible.
Based in Pennsylvania, Emily Weller has been writing professionally since 2007, when she began writing theater reviews Off-Off Broadway productions. Since then, she has written for TheNest, ModernMom and Rhode Island Home and Design magazine, among others. Weller attended CUNY/Brooklyn college and Temple University.