I received a distribution from an inherited IRA with basis. Although TurboTax asks about the basis, it requires the taxpayer to calculate the taxable portion offline. I do this every year by manually preparing Form 8606. Although TurboTax correctly posts the taxable portion of the distribution, it does not generate Form 8606 that is required by the IRS. Every year I override Form 8606 with the correct entries and attach it to my 1040 which I have to mail because Iam unable to Efile the return because of this overridden form. Does anyone know how to get this form to populate?
In TurboTax, search for this exact phrase, including the comma: 8606, nondeductible IRA contributions. Select the Jump to link in the search results. Proceed through the IRA section, answering questions as you go.
To trigger the 8606 in TurboTax
For the 4 situations listed at the top of this article, you can trigger Form 8606 with these instructions:
- Open your return if it isn't already open.
- Inside TurboTax, search for this exact phrase, including the comma: 8606, nondeductible ira contributions
- Select the Jump to link in the search results.
- Proceed through the IRA section, answering questions as you go.
- When you reach the screen Any nondeductible contributions to your IRA? answer Yes, then continue. We'll generate and fill out the 8606 behind the scenes.
Tip: On joint returns, 8606-T stands for "taxpayer" (first person listed on the return) and 8606-S denotes "spouse."
This method only works on my husband’s IRA which was not inherited. His Form 8606 has always generated. This does not work on my inherited IRA.
Do you have the correct taxable amount on Line 4b?
E-file your return, don't file on paper.
After it is ACCEPTED,
get Form 1040-X from IRS website and mail it in with your 8606, which you can also get in fillable PDF.
Note: since you are not changing any dollar amounts on your amended tax return, you can leave all the lines 1-23 EMPTY.
The names on 8606 should be "<owner> and <your name> BENE" or Beneficiary if it fits, and your SSN.
Part III explanation: "didn't include Form 8606 with e-File".
You will have to mail it so this does not use up your one 1040-X e-File.
In a few months to a year, you will get an acknowledgement from the IRS.
TurboTax simply does not support the generation of Forms 8606 for distributions from inherited IRAs. You have no choice but to print and mail your tax return if you want to include this form in your original filing.
This method does not work for an inherited IRA with basis. Apparently TurboTax will not generate a Form 8606 for an inherited IRA. The form has to be manually prepared by the taxpayer then attached to Form 1040 which is then mailed to the IRS. I don’t understand why TurboTax can’t code the software to generate this form so the taxpayer can then efile.
The method I described above on 2-26 will work.
The issue I have is not the calculation of the taxable amount of the distribution. I have done that myself over the past 10 years by following the instructions on Form 8606. The IRS requires the inclusion of Form 8606 with Form 1040. Since TurboTax will not generate Form 8606 for an inherited IRA, I have to override the form which precludes me from Efiling.
You're missing the point by a mile.
You just enter the correct taxable amount when you enter 1099-R and uncheck the "not determined" box.
No Form 8606 is generated in that case.
We were excused from taking a required minimum deduction in 2020 because of Covid, but we took RMDs in 2021.
How can I check Form 8606 in order to see that the correct basis and the correct total value for our IRAs are included on those 8606 forms?
You have to do this by visual inspection.
Always print a copy of your completed tax return for your records, and review it carefully before e-Filing.
You will need it if you are audited by the IRS, or to amend if a TurboTax update changes your return or for any other reason,
AND, to find your AGI next year.
@fanfare I appreciate the suggestion to efile and then mail in a 1040X with the manual 8606. But I was worried because the 8606 instructions say
File 2021 Form 8606 with your 2021
Form 1040, 1040-SR, or 1040-NR by
the due date, including extensions, of
your return.
And by your method the 8606 is not filed with the 1040.
But I found authority for either filing a 1040x as you suggest or a "second" 1040 before the due date. (this does NOT say extended-due date). Basically in that case the IRS considers the 1040x or second 1040 to be a "superseding return" and will deem it to be timely filed and (at least for a second 1040) to override anything on the first return.
See I.R.M. 21.6.7.4.10 https://www.irs.gov/irm/part21/irm_21-006-007r#idm140031113580544
Also of interest is https://www.meadowscollier.com/amended-tax-return-or-superseding-tax-return
I have an old non deductible contribution to my IRA and need form 8606 to report it . How do I bring the form up
If you want to file an "old" missing 8606 you must get form 8606 for the year in question from the IRS website under "Forms".
Yes, please clarify what you mean by "old?" Also is it for an inherited IRA or it it your own IRA?
Technically you may not be able to file an old 8606 since the instructions require that the form be filed with your 1040 (unless you don't have to file 1040, then you may mail the 8606 separately). The prior discussion we've had here is about whether you can file an amended return with the 8606. It's pretty clear to me that you can do that before the due date, but it isn't so clear beyond the due date, much less for prior years. On the other hand it seems strange to not allow an amended return to claim a missed deduction for "open" years. Yet there some things (like various "elections" that you can't make late or cannot change after the due date or filing of a return).
"We were excused from taking a required minimum deduction in 2020 because of Covid, but we took RMDs in 2021."
Yes, this was so for us, with ongoing 8606. When TT imported from last year, it found my 8606 because I had a distribution, but not spouse's, who had none.
I typed his info manually, thought mine would automatically generate correct numbers, but TT hid all the calculations in Zoom sheets and the actual form to be filed had many blanks with asterisks. Since the IRS won't have the software to Zoom into the calculations, I'm going to over-ride them and type it in myself.
Yes, we print them out every year, so we know the current basis. Sorry we ever did this, what a pain. Make a Roth instead.
This year i followed the instructions to do it within the IRA question and it did generate the 8606. However it had seemingly random numbers on it, that i have no idea where it came from and no way to find out. It changed my taxes in an odd way when i put in what i thought are the correct numbers. I've always done it by hand before as part of the taxes, and i have no idea why it has these weird numbers. Like telling me i took an RMD much larger than i did. Any way to find out where these numbers come from?
there is only one number that TurboTax keeps in its history if you used TurboTax over all these years.
That is your prior years basis Form 8606 Line 2 which comes from the history.
That should match your records.
IRS expects you to keep all your Filed Forms 8606 in your own records so these discrepancies don't arise.
^ But as a first-time user of TT Online (previously used an accountant -- no prior TT product), how do I get my old carryovers "into" TT without filing a new Form 8606? I have carryovers for taxpayer and spouse tIRA basis and for taxpayer and spouse Roth conversion/Rollover basis. These have just been swept along in the background for my "General Information" in my CPA's software. Thanks!
keep good records of your prior years basis and enter it when called for.
that would be in some future year, and expect then to have a new prior years basis.
I tried to trigger a Form 8606 because a tax expert told me I'd need to submit it every year we had a basis. (She had me mail in thirteen 8606's for the years between the creation of the IRA and the 2020 conversion year.) In 2020 we converted a portion of the traditional IRA to Roth IRA and TurboTax created an 8606 to reflect the amount that was not taxable (old combat pay rolled into the IRA long ago). In 2021 we neither contributed nor converted any amount from the IRA. Should TurboTax have created a 2021 Form 8606? I tried to trigger it as noted here in the Community. If it should not have because we didn't touch the IRAs in 2021, do I just keep the 2020 Form 8606 and update from that the next time we convert the IRA with no 8606 forms for the years in between? Or do I need to file Form 8606 for every year we have a basis even if we've had no new activity during that year?
@Morrisecat wrote:
If it should not have because we didn't touch the IRAs in 2021, do I just keep the 2020 Form 8606 and update from that the next time we convert the IRA with no 8606 forms for the years in between? Or do I need to file Form 8606 for every year we have a basis even if we've had no new activity during that year?
As lawyers say "show me the authority." It is very hard to evaluate the soundness of advice without a citation.
When a particular form is involved, a good place to start is the instructions for the form.
You only need to file an 8606 when you have a distribution from an IRA with basis. Distribution here includes a withdrawal, a conversion to a Roth, or sometimes for transfers of IRAs between spouses during a divorce. (There are some more requirements if Roth IRAs are involved.)
I would keep all of the 8606s but you are probably ok with just the last one filed.
see "Who Must File" on the first page of https://www.irs.gov/pub/irs-pdf/i8606.pdf
@Still-puzzled wrote:
^ But as a first-time user of TT Online (previously used an accountant -- no prior TT product), how do I get my old carryovers "into" TT without filing a new Form 8606? I have carryovers for taxpayer and spouse tIRA basis and for taxpayer and spouse Roth conversion/Rollover basis. These have just been swept along in the background for my "General Information" in my CPA's software. Thanks!
Good questions. I find it much easier to find the right place for this in the PC/Mac download software. See below for the IRA worksheets.
For Traditional IRA basis (in either download on online), TT will ask you about your IRA basis after you enter any 1099s. See the first screenshot below. Answer yes and TT will let you input your basis and even help you figure it out. (Except for inherited IRAs).
Perhaps someone else can tell you where to find the roth contribution carryover entry area from the interview,
"a tax expert told me I'd need to submit it every year we had a basis."
The tax expert was wrong.
To reiterate what jtax said, the IRS says that Form 8606 should only be included when there is an addition to or consumption of basis, or there is a Roth conversion to report.