Form 8606 - Help

Forum|Forum|21 days ago
July 10, 2026
6 replies
103 views

Good morning -

My husband will be 75 this year and I will be 72. We have a Traditional IRA and for the past ten years we have made after tax contributions, these have not been on a regular basis. I had no idea that we should have been keeping up with these after tax contributions let alone be filing an IRS form. In my mind I thought that the people who oversee these accounts tagged them and they would file turn this into the IRS. He has already started taking his RMD from his account.

So here are my plans how to attempt to correct with y’all’s help. I have gone through my records and have created a spreadsheet with when these contributions were made. Next I am going to get copies of the 1040’s but in getting copies of the 1040’s together I have found that I have already shredded the first two years of the 10 years which is the years that we made contributions. I am going to get with the people that oversee our Traditional IRA’s and get as much information from them as I can.

When it gets time to file form 8606 what steps do I need to do.

I appreciate everyone’s input.

TIA

NCperson

Level 15

this is messy and may require a tax pro to straighten this out.

How did you report the RMDs for 2023 and 2024? Did you report the entire RMD as income or use some other method? I am assuming 2023 was the first year of the RMD.

What should have occured is you were to take the Trad RMD balance from dec 31, 2022. How much of that balance was after tax contributions? that percentage of the RMD was not taxable. I would amend the 2023 tax return to reflect what was taxable and what wasn’t. Then repeat the cycle for 2024 and 2025.

Example: Dec 31, 2022 Trad IRA balance was $600,000 of which $60,000 was after tax contributions. The RMD requirement was $600,000 / 26.5 or 22,642. Since the after tax contributions were 10% of the RMD, then the taxable portion of the RMD was 90% of $22, 642, meaning $2,264 was NOT taxable.

the December 31, 2023 Trad balance was $590,000, of which ($60,000- 2,264) was after tax. The RMD requirment was $590,000 / 25.5 or $23,137 and the after tax portion of that was ($60,000-2264)/590,000. etc.

you have until April 15, 2027 to amend the 2023 tax return to claim any refund, so there is time to straigten this out but the clock is ticking down. if you owe, you owe, even if April 15, 2027 passes.

how are you confident you didn’t take a deduction years ago for those IRA contributions? did you review the tax returns for those years?

ckw-jw51Author

Level 4

Thank you for responding … I really appreciate it. I will get this fixed … but like you said time is ticking. I truly wish my IRA was 600,000, but were regular working people and not really smart when it came to saving. But have gotten better over the years. Our tax bracket is 12% . I spoke with the people that have been handling our traditional IRA’s and was told they are not Non-Deductible.

But again thanks for your input.

NCperson

Level 15

if the percent of non-deductible / after tax portion to the total is VERY high (say over 75%), you might talk to a financial advisor and convert the whole thing to a Roth, pay any tax and be done with it for the rest of your life. if you are in a 12% tax bracket, it might be worth doing the conversions over a few years to minimize the tax implications and not convert so much that you end up in the 22% tax bracket in any one year.

My personal goal would be to convert enough so that the income results in income at the top of the 12% tax bracket and not in the 22% tax bracket.

There is something called the “widowers tax” that the survivoring spouse needs to be concerned about. Much of the implications of that can also be avoided by converting some of the Trad now.

Interesting that someone would state they trad IRA contributions are non-deductible? While what is done is done, did they explain why? While contributions to a Trad IRA are unlimited, the deductibility is a function of your income and whether your employer offered a pension plan.

Was the 1099-R form you received for the RMDs coded in Box 7 with a “7”? If the people handling your IRA knew it was non-deductible Box 2 should have been blank and the “taxable amount undetermined” should have been checked. If that is all true, how did you determine what portion was taxable (i.e. what did you put in box 2a) when you completed your 2023 -2025 tax returns?

Mike9241

Level 15

see a pro because those missing form 8606s must be filed for all years in which no deduction was taken for the iRA contribution. Without them the IRS assumes you have zero basis. Then you need to amend those years for which a distribution was taken. Form 8606 computes the nontaxable portion. however, to do them you need the value of all your traditional IRAs on 12/31 of the particular tax year (line 6) and remaining basis (line 2 of the form)

Mike9241

fanfare

Level 15

“ I spoke with the people that have been handling our traditional IRA’s and was told they are not Non-Deductible”

The custodian cannot tell you that. Non-Deductible is an election that you make when filing your tax return.

“When it gets time to file form 8606 what steps do I need to do.”

If you did not file Form 8606 every year with the election, you have no basis in Traditional IRA. Your RMD is taxable income.

Form 8606 is not used.

VolvoGirl

Level 15

And “NOT Non-Deductible” would make them Deductible? How did you make these after tax contributions? After tax doesn’t affect whether they are deductible or not. 2 different things. All new IRA contributions come from after tax money. As opposed to Rollover amounts from an employer 401K plan.

If you didn’t take a deduction for them did you still enter the contributions into Turbo Tax (or whatever you used)? To check if you qualified to make a Traditional IRA contribution in the first place?