Retirement tax questions
Do not forget to fill out the Form 8606 Nondeductible IRAs section in the program. If you have made any nondeductible contributions to your traditional IRA, you may not pay taxes on the entire conversion amount. Those nondeductible amounts are so-called the basis. To see how this amount is calculated, I suggest you review your Form 8606 Nondeductible IRAs. If you ever made nondeductible contributions, it will allow you to take withdrawals tax-free or partially taxable.
To quickly access to the 1099-R / 8606 section, here are the steps:
In TTO,
Sign in to your account, follow prompts
- From the upper right menu, select Search and type in 1099r and Enter
- Select the Jump to 1099r
- On-screen, Let's import your tax info, select I'll type it in myself
- Follow prompts until you see the attached screens.
For more information about the Form 8606, click here Nondeductible Contribution
@BarryK123, please see my answer above. Here is more information about an inherited IRA:
Per IRS, if you inherit a traditional IRA from a person who had a basis in the IRA because of nondeductible contributions, that basis remains with the IRA. Unless you are the decedent's spouse and choose to treat the IRA as your own, you can't combine this basis with any basis you have in your own traditional IRA(s) or any basis in traditional IRA(s) you inherited from other decedents. If you take distributions from both an inherited IRA and your IRA, and each has basis, you must complete separate Forms 8606 to determine the taxable and nontaxable portions of those distributions. Hope it helps.
