Have often wondered how to do this and if it is legal. Does the IRS really care if you don’t file form 8606 and then go ahead and use the contribution as a deduction ? An example of this would be for reducing AGI to get under the MAGI limits.
With respect to ACA MAGI, you can only deduct TIRA contributions that appear on p 1 of Form 1040. Deductible contributions are reported there, but non deductible contributions are not and neither are Roth contributions. Therefore, you would need to qualify and make a deductible contribution and report it on line 32 of Form 1040 in order to reduce your ACA MAGI. All you need to do is determine if you qualify for a deduction or partial deduction since you only need a $200 deductible TIRA contribution to reduce ACA MAGI by that amount.
Meaning I think I can go forward with it. I am 61 and collecting a pension, that pension and what I get fron my rolled over 401k to an IRA @ Fidelity is baciscally what my wife and I live on. She is 60 and does have part time earned income. So from what I can tell we are eligible for a deductable TIRA due to the fact that either of us have have the luxury of having a workplace retirement. So getting back to the question, are you agreeing that you can make a deductable contribution to a TIRA using after tax dollars, then NOT file for 8606, then pay the “extra” tax when the TIRA deductable amount is distributed ???
If neither of you is a participant in a workplace plan, you can deduct your contribution. Whenever you deduct the contribution, you do not file Form 8606. That is only for non deductible contributions. When you take distributions from the IRA the will be taxable except to the extent the IRA owner made non deductible contributions in the past. That would not be an extra tax because this money has never been taxed. You only pay a double tax if you make a non deductible contribution and fail to report it on Form 8606. That does not apply to you, unless this happened in some prior year.
Not sure if an HSA compliant Health Insurance plan would work for you, but if it is a consideration you and your wife could make a family (HSA contribution + catch up = $7750) which directly lowers your AGI and does not require that you have earned income to make an HSA IRA contribution while other IRA contributions do.
Permalink Submitted by Alan - IRA critic on Thu, 2017-11-02 23:40
Permalink Submitted by Brian Mason on Fri, 2017-11-03 13:54
I may be over the MAGI limit for 2017 for ACA subsidy, not much maybe $200. So instead of going over the MAGI limit and paying back $6k I am wondering if I can open a traditional IRA and make a $200 “after tax” contribution. Basically yes I would be doubled taxed but which would you want to pay, extra tax of maybe $20 or the $6k subsidy ?