8606 form. In 2016 and 2017 Line 6 was left blank. Should I be entering the total IRA value on LIne 6? Has Turbotax supported making this entry in the step-by-step?

[daviddorenbos241]

My total IRA value was large and I had about $45K in non-deductible contributions.  With 8606-Line 6  blank, the taxable portion of my RMD was significantly reduced.  With Line 6 filled in, only a very small percentage of the RMD is tax free.  Must Line 6 be filled in? Turbotax did track my non-deductible contributions for a couple of decades.   I do not recall that Turbotax asked for the total IRA value.  Did Turbotax ask and I just missed the question?

[macuser_22 · Accepted solution]

Yes, you must enter that or the tax will be artificially low and the IRS will assess that tax plus late penalties and interest.

You can NEVER withdraw ONLY the nondeductible part - it must be prorated over the entire value of ALL Traditional IRA accounts which include SEP and SIMPLE IRA's. (For tax purposes you only have ONE Traditional IRA which can be split between as many different accounts as you want, but for tax purposes they are all added together).

For example using rough figures: if you had $60K of nondeductible contributions in an IRA with a total value of $600K (10:1 ratio), then when you take a $60K distribution from any IRA account $6,000 would be nontaxable and $54,000 would be taxable (same 10:1 ratio) , with the remaining $54K of basis staying in the IRA for future distributions. As long as there is any money in the IRA, there will be some basis.

TurboTax will ask for your non-deductible "basis" and then the *Total Value* of *all* Traditional IRA accounts as of Dec 31, 2017. That is so the prorating of the basis can be properly proportioned between the current years distribution and the remaining IRA value. That is done on the 8606 form.

[dmertz]

It's easy for the user to inadvertently skip the section where TurboTax asks these questions.  To reach it you must click the Continue button on the Your 1099-R Entries page.