Form 8606

Forum|Forum|3 months ago
February 9, 2026
1 reply
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I have a small amount of non-taxable funds in my IRA. I have met all RMD requirements. When I enter the value of all my IRAs on Line 7 of Form 8606, the expected return amount goes down. I cannot understand why that would happen since the carryover of the basis entered on line 6 comes from the previous year taxes. My expected return goes down by about a third of the basis. I cannot understand why that happens. Thank you for any comment you may have to educate me.

ReneV4

Level 6

Your expected return amount may be going down due to how the IRS mandates that distributions be taxed.

As long as you have any pre-tax money in any Traditional IRA, you are forced to "pro-rate" your basis over time.

If your basis is a small percentage of the total value of all of your IRAs, then a smaller percentage of your RMD will be tax-free.

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GaryEKruseAuthor

Level 2

Thank you for the explanation. Looking back at previous returns I find that not only did I pay taxes originally on that money, but in the last six years I have paid more in extra taxes than the value of the contributions. So it is a complete loss. Live and learn.