Deductible Versus Nondeductible IRA Contributions

The type of contribution you make affects your tax bill when you withdraw the money or convert the account to a Roth.

Is there an easy way to find out which traditional IRA contributions my husband and I made in past years were tax-deductible? I can’t find evidence that we took any deductions for contributions, but my husband thinks we did in some years (our record keeping leaves a lot to be desired). I don’t want to get into trouble, but I don’t want to pay double taxes, either.

What you really need to track down are your nondeductible contributions, which will make a difference in your tax bill when you withdraw money or convert the traditional IRA to a Roth. All of your IRA distributions (and an entire Roth conversion) will be taxed unless you can show that you had made nondeductible contributions.

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Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.