@david9821 wrote:
I know this is the sum of your Traditional IRAs - no ROTHs. Why is it asking this? I feel I've left this blank in the past since I saw no tax issues related to this. Is it important? If so why?
If you have a non-deductible basis in the IRA then the year end value is critical, because knowing that is the only way to calculate the taxable amount of the years distribution which must be prorated between the distribution and total value of all remaining Traditional, SEP and SIMPLE IRA that exist on Dec 31 if the year of the distribution. That is calculated in on lines 6-15 on a 8606 form.
Failing to enter that year end value will make the value 0 so all remaining basis will be applied resulting is a taxable amount less than what it should be. The IRS can assess back tax and interest if and when they catch up with this and that can be a large tax bill depending on the amount of underpaid tax.
**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.**
