My income is over roth limit so i backdoored 6000$ for 2020 thru vanguard traditional IRA to Roth IRA. No pro rata since i cleared my entire account.
I didnt realize I need to file a 8606 even though everything is after tax ...
What is the purpose of form 8606 if everything is post tax since everything in Roth is supposed to be tax free ?? How will this affect me in the future if i dont file 8606? I read filing a 8606 for previous year is 50$ which is a lot of money.
Thank you
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The purpose of the 8606 is to report nondeductible traditional IRA contributions essentially so the IRS has record so when you take a later distribution, the correct taxable amount can be determined.
You can send the 8606 for the past years now and request that the penalty be abated.
In your case, you know the amounts and that the money came from the Roth, but the IRS processes millions of returns that are not as simple- either not the entire amount was nondeductible, etc. so the 8606 helps taxpayers- especially in situations where there are multiple years and varying amounts.
Never done amendment before. Do I submit 8606 with a 1040x? Or can i just submit 8606 for 2020 by itself..
And do I do this for federal and state?
Where do i send this form??
Form 8606 is a form for your federal income tax. You don't need to file 1040-X, instead, you can file Form 8606 by itself.
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