Since contributions to Roth individual retirement accounts (IRAs) are made with post-tax dollars, the eventual withdrawals are tax-free. Interest, dividends or capital gains on a Roth IRA account does not have to be reported on federal income tax returns unless and until the owner takes distributions. The Internal Revenue Service (IRS) also does not require Roth IRA contributions to be reported on income tax returns.
Unlike traditional IRAs, contributions to Roth IRAs are not tax-deductible. The annual maximum contributions to both types of IRAs are the same. At the time of publication, taxpayers under the age of 50 may contribute up to $5,000, while those over the age of 50 may contribute $6,000, as long as the individual earned at least that much. The minimum age to begin distributions from either type of account is 59 1/2. However, the IRS requires mandatory distributions by the age of 70 1/2 for tax-deferred traditional IRAs, while Roth IRA account owners need never withdraw funds and may also continue to contribute to Roth IRAs past the age of 70 1/2 if earning income.
Roth IRA Adjusted Gross Income Limits
While anyone with earned income may contribute to a traditional IRA even if making too much money to deduct the contributions from taxes, only those meeting certain adjusted gross income (AGI) limits may contribute to Roth IRAs. As of the time of publication, the AGI for single filers to qualify for a Roth IRA contribution is under $107,000 for the full amount, and between $107,000 and $122,000 for a partial contribution. For a married couple filing jointly, the AGI limit is under $169,000 to both make full contributions, between $169,000 and under $179,000 for partial contributions.
Roth IRA Reporting
The taxpayer is not required to report contributions to the IRS on federal tax forms. That does not mean the IRS remains unaware of such contributions. It is the duty of the financial institution designated as the Roth IRA trustee to send both you and the IRS information annually about the contributions and total amount of money in the Roth IRA.
Reporting Roth IRA Distributions
If taking distributions from a Roth IRA, the IRS requires that the amount of the gross distribution is reported in box 1 of Form 1099 R, but leave box 2a blank. According to the IRS, "Check the "Taxable amount not determined" box in box 2b. Enter Code J, Q, or T as appropriate in box 7. Do not use any other codes with Code Q or Code T. You may enter Code 8 or P with Code J."
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