Question: May I direct part or all of my refund to apply as a contribution for the prior year to my individual retirement account (IRA) on Form 8888?
Yes, but the refund must be deposited by the due date for filing your tax return. In addition, IRS direct deposits of federal tax refunds will not indicate a contribution year for IRA accounts.
- You should ensure your financial institution accepts deposits for the prior year to IRA accounts.
- As with all IRA deposits, the account owner is responsible for informing the IRA trustee of the year for which the deposit is intended, for ensuring that contributions do not exceed annual contribution limitations, and for ensuring that contributions are timely made.
If you fail to notify the IRA trustee of the intended year for the deposit, the IRA trustee can assume the deposit is for the current year (e.g. a refund received in 2015 is deposited as a contribution for 2015 not 2014).
The IRS is not responsible for the timeliness or contribution amounts related to an IRA direct deposit.
- An error on your return or an offset of your refund could change the amount of refund available for deposit (for more information, see Are there conditions that could change the amount of my direct deposits?).
- You must verify the deposit amount and that the deposit was actually made to the account on time — by the due date of the return (without regard to extensions).
- If the deposit into your account does not occur by the due date of the return (without regard to extensions), the deposit is a contribution for 2015 rather than 2014, and you must file an amended 2014 return to reduce any IRA deduction and any retirement savings contributions credit you claimed for 2014 for that deposit.
Category: IRS Procedures
Subcategory: Refund Inquiries