Roth IRA & Federal Tax Filing

by Jane Meggitt

Federal tax filing requirements for Roth individual retirement accounts are fairly minimal and are another reason to consider choosing this type of retirement vehicle. The Internal Revenue Service does require filing information on early withdrawals of Roth IRAs, as it levies a 10 percent tax on these amounts. If taking an early withdrawal, file Form 8606, Part IV. However, distributions from Roth IRAs after the minimum age and specified account periods are tax-free.

Roth IRAs

Unlike traditional IRAs, Roth IRAs are funded with money that has already been taxed. While Roth IRA contributions are not deductible, like the traditional IRA funded with pretax dollars, withdrawals of contributions and earnings after reaching the minimum age of 59 1/2 are tax-free, as long as the account has been open at least five years. While owners of traditional IRAs must take distributions by the age of 70 1/2, there is no mandatory age for Roth IRA distributions. Roth IRA owners do not ever have to take distributions, and can use the accounts as estate-planning tools to leave assets tax-free to heirs and beneficiaries. Roth IRA owners may continue to contribute to the account past the age of 70 1/2 if earning income, unlike traditional IRA owners.

Contributions and Adjusted Gross Income

Although the annual contribution limits for Roth IRAs are the same as traditional IRAs, only taxpayers under a certain adjusted gross income (AGI) level may fund Roth IRAs. As of 2011, people under age 50 may contribute up to $5,000 to an IRA, and those over 50 may contribute $6,000, assuming there was at least much in earned income. Single filers with an AGI under $107,000 may make a full Roth IRA contribution, with partial contributions allowed for those making between $107,000 and $122,000. Joint filers may make full Roth IRA contributions if the AGI is under $169,000, and partial contributions between $169,000 and $179,000.

Trustee Reporting Requirements

Taxpayers do not have to report Roth IRA contributions on federal income tax forms. That is the responsibility of the trustee of the Roth IRA, the financial institution with which you opened the account. The trustee must send the Roth IRA owner and the IRS an annual report listing the amount of the prior year's contributions and the value of the account.

Reporting Distributions on Federal Tax Forms

If you begin taking distributions from the Roth IRA, file form 1099R with your federal taxes. According to the IRS, report the amount of the annual gross distribution in box 1 of the form, but do not fill in box 2a. In box 2b, check "taxable amount not determined." In box 7, enter the appropriate code, either J, Q, or T, but do not use other codes with Q or T. If using code J, enter 8 or P if appropriate.