I reported total value (and basis) of all trad IRAs on my '14 & '15 returns, but forgot to include a trad IRA annuity (I had distributions). Do I need to amend them?

[slsimon3938]

Because of my error, my nontaxable distributions were about $400 too high and my tax bill $125 too low. I have an extension, so haven't filed 2016 return yet.

[dmertz]

Is the IRA annuity a deferred annuity or has it been annuitized?
Do your 2014, 2015 and 2016 Forms 5498 for the IRA annuity report a year-end FMV in box 5?

[slsimon3938]

Deferred annuity. I began taking distributions in 2014 and fed tax is withheld. It is noted on each year-end statement that it is also a substitute 5498, so there is no box 5. I inquired about that, and was informed that I should use the year-end accumulation value as the FMV.

[dmertz · Accepted solution]

Yes, the year-end amount indicated to be the FMV should have been included on line 6 of each of these Forms 8606.  You should amend the 2014 and 2015 Forms 8606 to correct the calculations and submit them with Form 1040X to report and pay the additional taxes due.  Since the amount on line 14 of each of these Forms 8606 carries forward to the following year's Form 8606, do each amendment in sequence.  Send each amendment separately.  Make sure that your 2016 Form 8606 then shows on line 2 the amount from line 14 of the corrected Form 8606.

Note that even though your annuity year-end statement substitutes for the Form 5498 that would otherwise be sent to you, the custodian sends an actual Form 5498 to the IRS each year.  You can obtain your Wage & Income transcript for each year if you want to make sure that you are using the same FMV as was reported to the IRS for each year:

https://www.irs.gov/individuals/get-transcript

[dmertz]

You'll likely also need to amend your state tax returns if you live in a state that taxes IRA distributions.