Comprehensive Test No. 8

A Traditional IRA may be opened with a mutual fund, insurance company or through your stockbroker.

Any taxpayer receiving taxable compensation during the year and is age 70 1/2 or younger may open and make contributions to a Traditional IRA.

A Traditional IRA can be opened at a bank or other financial institution.

Some or all of your contributions to a Traditional IRA may be deductible, depending on your circumstances.

Earnings and gains on a Traditional IRA are generally not taxed until they are distributed.

ALL OF THE ABOVE

Wages

Salaries

Interest Income

Dividend Income

Bonuses

Deferred compensation received

Foreign earned income (excluded)

Rental income

Commissions

Professional fees

Taxable alimony

SEP IRA (Part of a Simplified Employee Pension)

SIMPLE IRA (Savings Incentive Match Plans for Employees)

Individual Retirement Account

Individual Retirement Annuity

ROTH IRA

Part of an employer or employee association trust account.

$5,500

$6,500

$4,279

$5,500

$6,500

$50,000

$5,500

$6,500

$38,000

$5,000

$5,500

$6,000

$6,500

A single taxpayer with a modified adjusted gross income (MAGI) of $62,925, covered by an employer plan.

A married taxpayer filing a joint return with a MAGI of $97,000 who is covered by an employer plan.

A qualifying widow(er) not covered by an employer plan whose MAGI is $250,000.

A married taxpayer filing a separate return, with a MAGI of $9,997,who is not covered by an employer plan, but whose spouse is covered by one. (Did not live with spouse at all during 2014)

A married taxpayer filing a joint return whose MAGI is $157,233, who is not covered by an employer plan, but whose spouse is covered by one.

A married taxpayer filing a separate return with a MAGI of $9,826, who is not covered by an employer plan, but whose spouse is covered by one. (Lived with spouse for one week during 2014)

A taxpayer filing as head of household with a MAGI of $69,384, who is covered by an employer plan.

To designate IRA contributions as nondeductible, you must file Form 8606.

Even if you do not have to file a tax return for the year, you must file Form 8606 to report nondeductible contributions.

You will have to pay a $50 penalty for failure to file a required Form 8606, unless you can show it was due to reasonable cause.

If you do not report nondeductible contributions, all of the contributions to your Traditional IRA will be treated as deductible and will be taxed when withdrawn unless you can show, with satisfactory evidence, that nondeductible contributions were made.

Unless it is due to reasonable cause, you must pay a penalty of $100 for each overstatement if you overstate the amount of nondeductible contributions on your Form 8606 in any tax year.

ALL OF THE ABOVE.

Enter the total distribution amount on line 11a; enter zero on line 11b. Write "Rollover" next to line 11b.

Enter the total distribution amount on line 12a; enter zero on line 12b. Write "Rollover" next to line 12b.

Enter the total distribution amount on line 15a; enter zero on line 15b. Write "Rollover" next to line 15b.

Enter the total distribution amount on line 16a; enter zero on line 16b. Write "Rollover" next to line 16b.

Enter the total distribution amount on line 11a; enter the taxable amount that was not rolled over on line 11b. Write "Rollover" next to line 11b.

Enter the total distribution amount on line 12a; enter the taxable amount that was not rolled over on line 12b. Write "Rollover" next to line 12b.

Enter the total distribution amount on line 15a; enter the taxable amount that was not rolled over on line 15b. Write "Rollover" next to line 15b.

Enter the total distribution amount on line 16a; enter the taxable amount that was not rolled over on line 16b. Write "Rollover" next to line 16b.

$3,100

$3,001

$3,010

There are no reporting requirements.

Because the taxpayer has a basis in the IRA in that the contributions made to a Roth IRA are never deductible, the contributions would have to reported on the taxpayers return using Form 8606 to avoid a potential $50 penalty.

You may be able to deduct contributions to a Roth IRA on your tax return in the same manner as a Traditional IRA

It is not possible for a taxpayer to contribute to both a Traditional IRA and a Roth IRA for the same year.

To be a Roth IRA the account or annuity must be designated as a Roth IRA when it is opened.

You may be able to establish and make nondeductible contributions to a Roth IRA regardless of your age.

You can leave amounts in a Roth IRA as long as you live.

Qualified distributions from a Roth IRA are tax free if certain requirements are met.

Alimony is a payment to or for a spouse or former spouse under a divorce or separation instrument.

To be alimony the payment must meet certain requirements.

Alimony is deductible by the payer and must be included in income by the recipient.

To deduct alimony you paid enter the amount on line 31a of Form 1040. Enter your spouse's (or former spouse's) SSN or ITIN online 31b.

If you are the recipient of alimony report it as income on line 11 of Form 1040. You cannot use Forms 1040-A or 10401-EZ

ALL OF THE ABOVE.

A qualified HSA trustee can be a bank, an insurance company, or anyone already approved by the IRS to be a trustee of IRAs or Archer MSAs.

You can claim a tax deduction for contributions you, or someone other than your employer, make to your HSA even if you do not itemize deductions on your Form 1040.

You must get permission or authorization from the IRS to establish an HSA.

A tax-exempt trust or custodial account that you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur is called a Health Savings Account (HSA).

The HSA can be established through a trustee that is different from your health plan provider.

An HSA is "portable", so it stays with you if you change employers or leave the work force.

You must be an eligible individual to qualify for an HSA. (Everyone is considered an eligible individual.)

Distributions from an HSA are tax free if used to pay qualified medical expenses.

A medicine or drug will be a qualified medical expense for HSA purposes if the medicine or drug requires a prescription, is available without a prescription (over-the-counter medicine or drug) and you get a prescription for it or is insulin.

To qualify for an HSA an eligible individual must be covered under a high deductible health plan (HDHP) on the first of the month, can have no other health coverage except what is permitted, cannot be enrolled in Medicare and cannot be claimed as a dependent on someone else's tax return.

An HDHP has a higher annual deductible than a typical health plan.

An HDHP has a maximum limit on the sum of the annual deductible and out-of-pocket medical expenses that you must pay for covered expenses.

An HDHP may provide preventive care benefits without a deductible or with a deductible below the minimum annual deductible.

Out-of-pocket expenses include copayments and other amounts, but do not include premiums.

ALL OF THE ABOVE.

Form 5498-SA

Form 1099-SA

Form 8889

Form 8853

Form 5498-SA

Form 1099-SA

Form 8889

Form 8853

Form 5498-SA

Form 1099-SA

Form 8889

Form 8853