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paul166
Returning Member

Form 8606 line 14 question

Hey everyone,

 

I started looking recently into doing a Backdoor Roth IRA which sent me down the rabbit hole of the form 8606 and the pro rata rule. All our contributions to our traditional IRAs have been non deductible as we are high earners. We never did any conversion or withdrawals over the years. I just forgot to submit the form in 2019 (or I did something wrong while filling my taxes).

 

Here is what my 8606 forms look like for me and my spouse over the years:

 

 

Spouse 1
- 2018 $line 1: $3.6k, line 14: $3.6k
- 2019 $6000 but no form 8606
- 2020 line 1: $6k, line 14: $6k
- 2021 line 1: $6k, line 14: $6k
- 2022 line 1: $5.5k, line 14: $5.5k
- 2023 no contributions
- 2024 no contributions

Spouse 2
- 2018 no contributions
- 2019 $6000 but no form 8606
- 2020 line 1: $6k, line 14: $6k
- 2021 line 1: $6k, line 14: $6k
- 2022 line 1: $6k, line 14: $6k
- 2023 no contributions
- 2024 no contributions

 



My question for you all is about line 14. On the form it says: "This is your total basis in traditional IRAs for YYYY [current year] and earlier years". Shouldn't the line 14 be the sum of all my non-deductible contributions from the previous year? for spouse 2, shouldn't the line 14 be $18k in 2022 and not $6k? or am I missing something?

 

I am trying to figure out if I just need to submit the forms for 2019 that I missed or if there is a deeper problem with the way I entered the data in TT over the years.

 

Thank you all for your help!

 

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1 Best answer

Accepted Solutions
KeshaH
Employee Tax Expert

Form 8606 line 14 question

Correct, Line 14 should show your total basis in your traditional IRA from all of your nondeductible contributions. It's possible that when you prepared your return in those years you didn't enter your basis so the form was prepared as if there were no prior nondeductible contributions.

 

If you didn't deduct your contribution made in 2019, you'll need to:

- file a Form 8606 to report your nondeductible contribution. Report your prior nondeductible contribution from 2018 on line 2 - this should be $3,600 from line 14 of the 2018 Form 8606. Line 14 of the 2019 Form 8606 should show a basis of $9,600.

- amend your 2020 Form 8606 to report the carryover basis from 2019.

- continue amending the Forms 8606 to report proper basis in your traditional IRA.


If your spouse didn't deduct the contribution made in 2019, they will need to:

-  file a Form 8606 for 2019 to report their initial nondeductible contribution. Line 14 of the 2019 Form 8606 should show a basis of $6,000.

- amend their Form 8606 for 2020. Line 2 should be $6,000 which is carried over from the 2019 Form 8606. Line 14 will then increase to $12,000.

- continue amending the Forms 8606 to report the proper basis in your spouse's traditional IRA.

 

If the 2019 contribution was deducted, you will just need to amend your 2020 and subsequent forms and your spouse will need to amend their 2021 and subsequent forms to report the basis from prior years and correct the reported basis. You will need to  convert your entire IRA balance to avoid the pro-rata rule. Otherwise, as long as there are nondeductible contributions in the account you will always have to include some of the conversion in income each year.

View solution in original post

3 Replies
KeshaH
Employee Tax Expert

Form 8606 line 14 question

Correct, Line 14 should show your total basis in your traditional IRA from all of your nondeductible contributions. It's possible that when you prepared your return in those years you didn't enter your basis so the form was prepared as if there were no prior nondeductible contributions.

 

If you didn't deduct your contribution made in 2019, you'll need to:

- file a Form 8606 to report your nondeductible contribution. Report your prior nondeductible contribution from 2018 on line 2 - this should be $3,600 from line 14 of the 2018 Form 8606. Line 14 of the 2019 Form 8606 should show a basis of $9,600.

- amend your 2020 Form 8606 to report the carryover basis from 2019.

- continue amending the Forms 8606 to report proper basis in your traditional IRA.


If your spouse didn't deduct the contribution made in 2019, they will need to:

-  file a Form 8606 for 2019 to report their initial nondeductible contribution. Line 14 of the 2019 Form 8606 should show a basis of $6,000.

- amend their Form 8606 for 2020. Line 2 should be $6,000 which is carried over from the 2019 Form 8606. Line 14 will then increase to $12,000.

- continue amending the Forms 8606 to report the proper basis in your spouse's traditional IRA.

 

If the 2019 contribution was deducted, you will just need to amend your 2020 and subsequent forms and your spouse will need to amend their 2021 and subsequent forms to report the basis from prior years and correct the reported basis. You will need to  convert your entire IRA balance to avoid the pro-rata rule. Otherwise, as long as there are nondeductible contributions in the account you will always have to include some of the conversion in income each year.

paul166
Returning Member

Form 8606 line 14 question

Thanks @KeshaH for taking the time to reply. That's what I feared unfortunately =/ Kind of crazy I've had the same issues for all those years, I just followed the TT prompt.

 

I have two more questions for you if you don't mind:

1) knowing that we didn't make any contributions in 2024 and I won't do the backdoor conversion before everything is corrected. Should I do the correction after submitting my taxes for 2024? or do you recommend correcting the previous years first then filing 2024?

 

2) since i have to amend 5 years of returns, can this be done from within turbotax or do I need outside help for this?

 

Thanks again!

KeshaH
Employee Tax Expert

Form 8606 line 14 question

You can calculate and report the correct carryover basis on your 2024 Form 8606 and amend prior ones for support after the fact.

 

The Form 8606 is considered a "standalone" form. You won't need to amend your whole return for those years, just update the 8606, print, sign, and mail. You should be able to update the form within TurboTax, however you may need to download the desktop version for older years to make changes to the form.

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