I realized that I haven't been reporting my form 8606 correctly. My cost basis has been missing (not accumulating) for each year's contribution. Is there a way to amend?

[sarang-bhadsavle]

My form 8606 on past years' tax returns had a 0 cost basis (or the form was not filed) when it should have had an accumulated total of my contributions from past years. Can I fix this on my next tax return to report the total cost basis (original post-tax contributions) so that I don't get taxed extra unnecessarily in the future? Or is there any alternative way to fix this? Thanks!

[Mike9241 · Accepted solution]

first check each of the prior returns to make sure you did not take an IRA deduction. if you did, your basis for that year would be zero.

Start with the first incorrect year. Go to this IRS website for prior years forms 

https://www.irs.gov/forms-pubs/prior-year . download the 8606 for each year omitted or filed incorrectly. if you had a prior basis for the first year you're correcting, enter the basis on line 2. show the current year nondeductible contribution on line 1.  Complete the top part of the form to supply info requested and sign and date on page 2.

Mail all these forms together in a single envelope with a brief letter of explanation, and state that there were no distributions taken during this period that would affect any of those tax years to the present. The IRS generally accepts these forms retroactively and does not charge a fee, but you probably will not get notification of acceptance. Just assume they were accepted, and then apply the accumulated total on the 2025 8606. the mailing address would be that of the latest year you're filing using the 1040 instructions.

Under this method, you are not filing amended 1040s. However, others suggest filing amended returns for each year. (the 1040 along with just the 8606.  Under this method each filing would need to be separate.