What Do I Do with this Form 5498?

You’ve filed your 2006 tax returns and breathed a sigh of relief!  Now you receive some Form 5498 from your brokerage firm. Don’t panic!  You didn’t need it for your tax return. Honest!   

The trustees of your IRA are required to use Form 5498 to report your IRA activity to the IRS. They also must send you an "information only" copy for your records. The trustees must submit this form to the IRS by May 31, typically long after your tax return is filed.

Form 5498 contains information you’ve already received on your year-end statement and/or Form 1099-R, such as:

– The amount you contributed to a traditional IRA during the year

– IRA rollover amounts (from a traditional IRA to another traditional IRA)

– Roth IRA conversion amounts (from a traditional IRA to a Roth IRA)

– Roth IRA recharacterization amounts (from a Roth IRA to a traditional IRA), and

– Your IRA values (the total amount in the IRA).

If you’re looking for Form 5498 in TurboTax, it’s not there. Anything that you needed to report on your tax return, you’ve already  entered into other areas of TurboTax such as the 1099-R screen. For details on where you may have entered the Form 5498 information on your tax return, check out the FAQ, Where Do I Enter Form 5498?.

Here’s good example of information that is on your Form 5498 but doesn’t need to be and shouldn’t be on your tax return. Your Form 5498 may show a direct trustee-to-trustee transfer from one IRA to another. Since it’s a trustee-to-trustee transfer, you didn’t receive a Form 1099-R and it didn’t need to be entered in TurboTax.

There is more than one type of Form 5498. All Forms 5498 report contributions to some kind of savings plan, including Coverdell Education Savings Accounts (ESAs), health savings accounts (HSAs), Archer medical savings accounts (MSAs), and Medicare Advantage MSAs. The same holds true for all Forms 5498 — you don’t enter them into TurboTax. Instead, you’ll enter your contribution information from your year-end statements.

So you can now breathe a bigger sigh of relief. Your 2006 tax year is really over!