Question about tax return filing requirements for Roth IRA contributions

[Guest rainbowstew]

Say a person has an income amount for a certaiin year that is under the limit at which you start owing income taxes. I think it is presently $7,000 per year for a single person. Assume you did not have any tax withheld, then you would not be required to file a tax return. (If I am mistaken about this, please advise.)

So assume that someone in that situation made under that amount, and put some of it in a Roth IRA because it was still earned money. Is he going to run into any problems with the IRS for not filing the tax return? Does the IRS require filing a tax return or any other kind of documentation to verify that he actually did make the amount of money he put into the Roth IRA account?

Thanks for any info.

[Guest rainbowstew]

Clarification: It is my understanding that if you do not make enough money to owe any income tax, then you don't have to file a tax return unless it is to get money refunded that was withheld. Therefore if you didn't have any withheld you wouldn't need to worry about it.

[John G]

It is my understanding that your Roth participation is not effected by your not filing. I would recommend that you keep records of your "earned income" to answer any questions that may pop up in later years. The Roth contributions are not listed on your tax forms. For example, there are a lot of teenagers with Roth accounts that do not need to file a tax return.

[txdd]

If your earned income is from W-2 wages, then the IRS does know about your earnings because your employer reports that info to them.

If you are refering to self-employment earnings, then you are required to file a return (and pay your SE taxes) if you netted more than $400.

A Roth contribution based on unreported SE income, could (rightly) raise some questions.

Also, return filing income limits are lower if are claimed as someone else's dependent.

[John G]

Good points TXDD -

Another reason you may want to file is because you are owed a refund or qualify for a low income subsidy.