User's Manual - Drake Software

Retirement Income
Drake Software User’s Manual
Deductible IRA contributions are calculated from the 8606 screen and displayed on
the “IRA deduction” line of Form 1040. If an amount is entered into the Deductible
IRA field on screen 4, it is combined with the amount from the 8606 screen.
If a taxpayer is covered by a pension plan, use the 8606 screen instead of screen 4. If
the program determines that the contribution amount exceeds the maximum allowed,
it generates a NOTES page with the return.
TIP
If Form 8606 is not required but you want to generate it anyway, go to
the 8606 screen and select Print Form 8606 even if not needed.
Converting
to a Roth IRA
To report the transfer of an amount from a traditional IRA to a Roth IRA, enter the
amount on the ROTH screen (Figure 5-19).
IRA Penalty Computations
Figure 5-19: ROTH screen field for amount to be transferred to a Roth IRA
This amount is carried to the appropriate line of Form 8606.
IRA penalties are calculated using data entered on the 5329 screen (Form 5329, Additional
Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts).
Carrying
1099-R Data
to Form 5329
It might not be necessary to enter data directly onto the 5329 screen. If a distribution
code of “1” (Early (premature) distribution, no known exception) has been entered as
Dist. code (box 7) of the 1099 screen, you can force the distribution amount from a
1099-R to flow to Form 5329 and have the taxable amount of the distribution subject
to the 10% penalty. To do so, go to the desired 1099 screen and select the applicable
box under Additional Information for this Distribution (Figure 5-20).
Figure 5-20: Select box to carry 1099-R data to Form 5329
120 Tax Year 2012