@lchan wrote:
@Opus 17 That is correct. I have filed with TurboTax for several years now and I do remember getting the message saying that my income was too high and I was not eligible for the deduction from the IRA contribution.
With regards to the 2023 return, yes, form 8606 is included (same with earlier years too).
Form 8606 is used to keep track of contributions that are allowed, but not deducted. Line 14 should be approximately the total of non-deductible contributions that you have made (contributions since joining your employer's plan).**
The impact of non-deductible contributions is that you did not take a tax deduction when you made the contribution, so you do not pay tax on that portion when you withdraw.
For example, if your IRA balance is $100,000 and you have a form 8606 documenting that you have $40,000 of non-deductible contributions, and you make a withdrawal, that would mean that since 40% of the account represents contributions you already paid tax on, then 40% of the withdrawal is tax-free and only the other 60% is taxable.
To claim this adjustment, you need to keep the most recent form 8606 for use when filling out any tax return that has an IRA withdrawal, conversion or rollover. That return will generate an updated 8606, that you keep until the next time you have a withdrawal or contribution. That means you need to keep your 2023 form 8606 until you retire and start withdrawing. This is an exception to the general rule that you should keep tax papers for 3 or 6 years.
Assuming your non-deductible contributions were properly reported, then you have done everything right and have nothing to fix and nothing to worry about. Just save that form 8606 until you retire, or until the next time you contribute, withdraw, convert or rollover your IRA.
**If form 8606 line 14 does not have all your non-deductible contributions going back to 2011, I would probably ignore it and move on. The IRS can only audit you for 6 years, so as long as you reported your non-deductible contributions on form 8606 from 2019 onward, I would forget about any errors or omissions from 2018 and earlier.
