Do I need to report my 2024 traditional IRA contribution?

[yatoshura]

I contributed the full $7000 amount as a lump sum to my traditional IRA account in 2024. Turbo Tax seems to determined that my traditional IRA contribution does not really matter for deduction based on my income situation. It showed this message "You can't deduct your traditional IRA contributions." 

Should I still enter my IRA contribution anyway? Any consequences if I don't report this contribution?

[SharonD007]

Yes, you should still enter your non-deductible IRA in TurboTax.  These contributions are reported on Form 8606.  Form 8606 keeps track of your non-deductible IRAs so you don't end up paying taxes on the money twice.

Refer to the TurboTax articles How much of my Traditional IRA contribution is deductible in 2024? and What is IRS Form 8606: Nondeductible IRAs for more information.

[yatoshura]

@SharonD007 

When I'm reporting my traditional IRA contribution for 2024, Turbo Tax also asked for my total IRA basis.

I have two traditional IRA accounts and they both have more than $6K each. For 2024, I only contributed to one of the IRA account. I also have not contributed to my traditional IRA since 2021. I checked my 2022 and 2023 1040 filings and they both do not have a Form 8606.

Do I just use the Form 8606 line 14 from my 2021 1040 filing as my total basis for 2024?

[AnnetteB6]

Yes, since you have not made any additional contributions or taken any distributions since 2021, the amount on your 2021 Form 8606 line 14 is still your basis up to the point of your 2024 contribution.  

@yatoshura 

[dmertz]

Not only should you report your nondeductible traditional IRA contribution, the law requires you to report it on Form 8606.

[yatoshura]

@AnnetteB6 

I checked my two traditional IRA account balance and it is more than the total basis from 2021. I invested some of the IRA funds into stocks and it seems like the brokerage also distributed some dividends. In this case, do I still only report the 2021 form 8606 total basis or should I report my current most up-to-date total balance from both accounts?

[AnnetteB6]

Your basis is the amount of non-deductible contributions that you have made over the years.  This does not include any earnings from investments in the accounts or dividends added to the accounts.  Those things increase the total balance of the accounts, but they do not change the basis.  

The basis is only changed when you make a non-deductible contribution (basis will increase) or take a distribution (basis will decrease).  Form 8606 is used to keep track of the basis.  

So, prior to your 2024 non-deductible contribution, you basis is still the same from the 2021 Form 8606.  But, the total balance will be different.  

@yatoshura