I neglected to file my non deductible IRA contribu...
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rg69morrison
Level 1

I neglected to file my non deductible IRA contribution tax basis on an 8606 for many years ... what is the best course of action to rectify?

I've been performing a self audit of my 8606 forms as I prepare for retirement (in 9 years).  I have found in 2012 until present my non deductible contributions have been reported each year on form 8606, but my previous years basis in traditional IRAs was not.  Since I've reported all my contributions each year, am I able to send an updated 8606 for the current tax year with the correct basis and that will solve this?  What advice would you provide to clear this up?  I've used turbotax each year.

 

Thank you.

7 Replies
Critter-3
Level 15

I neglected to file my non deductible IRA contribution tax basis on an 8606 for many years ... what is the best course of action to rectify?

A form 8606 must be filed for each tax year required ... this form can be filed on it's own without a tax return since it is a "stand alone" form.  https://www.irs.gov/forms-pubs/prior-year

rg69morrison
Level 1

I neglected to file my non deductible IRA contribution tax basis on an 8606 for many years ... what is the best course of action to rectify?

Thank you for the information.  Can I submit all of my amended 8606s for the previous years in one mailing to the IRS with the explanation?

Critter
Level 15

I neglected to file my non deductible IRA contribution tax basis on an 8606 for many years ... what is the best course of action to rectify?

Yes if you make absolutely sure that the cover letter explicitly says there are more than one tax year involved.

macuser_22
Level 15

I neglected to file my non deductible IRA contribution tax basis on an 8606 for many years ... what is the best course of action to rectify?


@rg69morrison wrote:

  Since I've reported all my contributions each year,

 


Your post is not clear.  *How* did you report your non-deductible Traditional IRA contributions each year?

 

 The ONLY way to report a non-deductible contribution is on a 8606 form that TurboTax generates automatically when you enter the non-deductible contribution.

 

If you reported the contribution are you sure that is was not deducted?

 

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
macuser_22
Level 15

I neglected to file my non deductible IRA contribution tax basis on an 8606 for many years ... what is the best course of action to rectify?


@Critter wrote:

Yes if you make absolutely sure that the cover letter explicitly says there are more than one tax year involved.


Note that there is a $50 penalty for each 8606 form that is filed late unless you also state a reasonable explanation and request a waiver of the penalty.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
rg69morrison
Level 1

I neglected to file my non deductible IRA contribution tax basis on an 8606 for many years ... what is the best course of action to rectify?

My non-deductible contributions were reported each year on 8606, line 1 that Turbo Tax generates.  My previous years basis was not reported on the 8606.  Line 2 was not completed.

 

Hope that helps clarify.

macuser_22
Level 15

I neglected to file my non deductible IRA contribution tax basis on an 8606 for many years ... what is the best course of action to rectify?

Line 3 should have the sum of line 1 & 2.   If there was no Traditional IRA distribution  for the year then line 14 should be the same as line 3.    The next years 8606 line 2 would come form the last 8606 filed, line 14.

 

If you use TurboTax each year and transfer the last years tax return then TurboTax should keep track of the prior basis in the "IRA information worksheet" line 12 unless you skipped a year or did not transfer.

 

There would not be a penalty since you did file a 8606-  Amending a 8606 does not produce a penalty.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
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