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Retirement tax questions
The broker doesn't know if you took a tax deduction for the contributions or not They have no way to know what your basis is. They are just indicating that it is a taxable distribution, but the amount you will be taxed on is dependent upon your cost basis. When you made the IRA contribution, you should have filed a Form 8606 - Nondeductible IRAs. This form notifies the IRS that you are making a non-deductible IRA contribution. Form 8606 is also used to report non-taxable distributions from an IRA. To trigger Form 8606 in TurboTax:
- Open your return if it isn't already open.
- Click on Search, and type this exact phrase, including the comma: "8606, nondeductible ira contributions"
- Click on "Jump to 8606 ...."
- Continue through the IRA section
- When you reach the screen "Any nondeductible contributions to your IRA? Answer Yes, then continue. TurboTax will generate and fill out Form 8606.
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ā€ˇFebruary 10, 2021
7:11 PM