A question with excess traditional IRA contributions from previous tax year (2007):
Due to some unexpected income hike in 2007 (sold 5 years worth of ESPP stock purchase that year), it pushed up my total income for 2007 and I couldn't contribute the full $4000 traditional IRA amount (deposited way before I did my 2007 tax return) due to my higher than expected income in 2007. So, I filed a 8606 form for $1800 nondeductible Traditional IRA contributions in 2007 tax return and never withdrawed any them.
Now for tax year 2008, how should I deal with the $1800 on form 8606 (from 2007)? I have not contributed any money to 2008 traditional IRA so far but I would like to do so. Does this mean my upper limit for 2008 traditional IRA (under age of 50)would be $5000 - $1800 = $3200? (I assume I would get tax credit for that excess $1800 I contributed in 2007 this time?)
Thanks
Due to some unexpected income hike in 2007 (sold 5 years worth of ESPP stock purchase that year), it pushed up my total income for 2007 and I couldn't contribute the full $4000 traditional IRA amount (deposited way before I did my 2007 tax return) due to my higher than expected income in 2007. So, I filed a 8606 form for $1800 nondeductible Traditional IRA contributions in 2007 tax return and never withdrawed any them.
Now for tax year 2008, how should I deal with the $1800 on form 8606 (from 2007)? I have not contributed any money to 2008 traditional IRA so far but I would like to do so. Does this mean my upper limit for 2008 traditional IRA (under age of 50)would be $5000 - $1800 = $3200? (I assume I would get tax credit for that excess $1800 I contributed in 2007 this time?)
Thanks