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macuser_22
Level 15

I neglected to file my non deductible IRA contributions on an 8606 for many years ....Is there anything I could do now???

A 2012 8606 can only report a 2012 non-deductible *for* the 2012 tax year.   A 2011 contribution can only be reported on a 2011 8606.  

 

If you did not make a 2012 non-deductible contribution then you should also attach an amended 2012 8606 showing a zero contribution  and attach a note that the 2011 contributiin was mistakenly reported on a 2012 8606.       The IRS will probably not access any penalty for an error.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
AG2020
Returning Member

I neglected to file my non deductible IRA contributions on an 8606 for many years ....Is there anything I could do now???

OK, Thank you! I was able to pull transcript fr those years from IRS.Gov and I see those contributions being reported on form-5498 by institution holding my IRA and tax return clearly shows we did not take any deduction for that year. So I guess even though IRS knows that a contribution was made (reported by institution) and no deduction was taken (from Tax Return), we still need to file 8606? Is that correct?

macuser_22
Level 15

I neglected to file my non deductible IRA contributions on an 8606 for many years ....Is there anything I could do now???

Yes.   The 5498 does not replace a 8606.  The IRS would probably never catch this but if they did check they would find that the 8606's that you file did not match what the bank reported on 5498 forms and could deny the tax offset.   I recommend going by the book.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
AG2020
Returning Member

I neglected to file my non deductible IRA contributions on an 8606 for many years ....Is there anything I could do now???

Will do! Thanks for the help!!

luvlondon
Returning Member

I neglected to file my non deductible IRA contributions on an 8606 for many years ....Is there anything I could do now???

Hi...

I failed to file 8606 for non-deductible IRA contributions for 1985, 1995 and 1996.  Where would I get Form 8606 for 1985?   

 

What could I use as a reasonable cause explanation to avoid the non-filing fee of $50?  I was preparing my taxes manually for these years and did not realize that I was required to file Form 8606.   I wonder what has been the experience of other people in this chat.   Must I include the $50 fee upon filing or do I wait to be billed by IRS?

 

thanks much

 

 

    

macuser_22
Level 15

I neglected to file my non deductible IRA contributions on an 8606 for many years ....Is there anything I could do now???


@luvlondon wrote:

Hi...

I failed to file 8606 for non-deductible IRA contributions for 1985, 1995 and 1996.  Where would I get Form 8606 for 1985?   

 

What could I use as a reasonable cause explanation to avoid the non-filing fee of $50?  I was preparing my taxes manually for these years and did not realize that I was required to file Form 8606.   I wonder what has been the experience of other people in this chat.   Must I include the $50 fee upon filing or do I wait to be billed by IRS?

 

thanks much

 

 

    


Do NOT send the $50 penalty.  If the IRS imposes it then they will bill you.   The explanation can be anything that is reasonable.

 

Past years 8606 forms from 1987 to present can be found here:

https://apps.irs.gov/app/picklist/list/priorFormPublication.html?indexOfFirstRow=0&sortColumn=sortOr...

 

I do not believe that there is any 1985 8606 form because the Tax Reform Act of 1986 created the 8606 form and was effective starting in 1987 so it did not exist prior to 1987. Prior to 1987 I do not believe that it was possible to make a non-deductible Traditional IRA contribution.

 

 

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
luvlondon
Returning Member

I neglected to file my non deductible IRA contributions on an 8606 for many years ....Is there anything I could do now???

Thank you very much!

 

That explains why I could not see Form 8606 for 1985.  But I got a Form 5498 in 1985 from Vanguard showing contributions to IRA for that year and with the corresponding market value at end of the year.    In 1988, I also got Form 5498, no contribution but with market value of the account at end of the year.   Any thoughts then as to whether the 1985 contribution should form part of the cost basis?

dmertz
Level 15

I neglected to file my non deductible IRA contributions on an 8606 for many years ....Is there anything I could do now???

Traditional IRAs don't have a "cost" basis, they have basis in nondeductible contributions.  Since nondeductible contributions were not permitted until 1987, a contribution made for 1985 did not add to basis in nondeductible traditional IRA contributions, even if you failed to deduct a permissible contribution.

 

Having a Form 5498 for a particular year just means that you made an IRA contribution for that year.  IRA contributions first became permissible in 1975.  I'm not sure when Form 5498 was introduced, but it was before 1987; I have one from 1986.

macuser_22
Level 15

I neglected to file my non deductible IRA contributions on an 8606 for many years ....Is there anything I could do now???

The earliest 5498 that I can find is 1983.  And it only has one box on it - box 1 "IRA or SEP contributions".

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
Chickpea
New Member

I neglected to file my non deductible IRA contributions on an 8606 for many years ....Is there anything I could do now???

Can you repost that link (the as far as 1995 one). It is broken. I'd like to see it is possible, I'm dealing with this situation. 

macuser_22
Level 15

I neglected to file my non deductible IRA contributions on an 8606 for many years ....Is there anything I could do now???


@Chickpea wrote:

Can you repost that link (the as far as 1995 one). It is broken. I'd like to see it is possible, I'm dealing with this situation. 


The link for past years 8606 form works for me:

 

https://apps.irs.gov/app/picklist/list/priorFormPublication.html?indexOfFirstRow=0&sortColumn=sortOr...

 

(There are several pages of the forms so you need to go to page 2 for 1995)

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
Stevehofwa
Returning Member

I neglected to file my non deductible IRA contributions on an 8606 for many years ....Is there anything I could do now???

My situation is that I realize I did not always fill out the 8606s correctly. Every year I would make a non-deduct contribution and roll it over to a Roth.  No return showed a taxable distribution but often was not filled out correctly(showed no tax for the wrong reason).  Now I just have Roth IRA money and nothing in any regular IRAs.  Is there any reason to file corrected 8606s if it makes no difference?  I have the 1099s/5498s and the returns did not take any deductions.

dmertz
Level 15

I neglected to file my non deductible IRA contributions on an 8606 for many years ....Is there anything I could do now???

Stevehofwa, at a minimum I would forever retain in your records copies of all of the Forms 5498 and Forms 1099-R, and any tax returns for the corresponding years.  For many aspects of reporting on From 8606 the statute-of-limitations clock does not start to run until Form 8606 is files because From 8606 is considered to be a separate tax return for certain purposes.  Also note that section 408(o)(2)(C)(ii) the tax code requires nondeductible traditional IRA contributions to be reported on your tax return (that's one of the purposes of Form 8606).  If the IRS ever examines your tax returns the IRS will not recognize your contributions as having added to your basis in nondeductible contributions that would have reduced the taxable amount of your Roth conversions.  See Failure to report nondeductible contributions in IRS Pub 590-A.

 

Unless there was never any investment gain while the funds were in a traditional IRA, there was probably some taxable amount that should have been reported, but small amounts would not have made a significant difference in your tax liability.  However, if you have other traditional IRA accounts (including SEP, SIMPLE and rollover IRAs), your past tax returns could have substantially underreported taxable income and tax liability, potentially extending the statute of limitations for the IRS to be able to assess the tax.

Stevehofwa
Returning Member

I neglected to file my non deductible IRA contributions on an 8606 for many years ....Is there anything I could do now???

Thanks for the response.  I didn’t have an IRA(401k, but that doesn’t count), so no prorata issues.  I also made at most .02 in the account, so no tax issues.  The regular IRAs only had money in them for a few days.I have all of the 1099/5498s, brokerage statements, plus returns for the affected years.  So would it be worth the time to redo all of the 8606s(probably 7) and mail them in?  It seems to me that it’s extraordinarily unlikely that the IRS will check( and I have documents to prove my situation).

dmertz
Level 15

I neglected to file my non deductible IRA contributions on an 8606 for many years ....Is there anything I could do now???

How did you report the Roth conversion as nontaxable without filing Form 8606.  All Roth conversions are required to be reported on Form 8606.  Without Forms 8606 showing the calculation of the nontaxable and taxable amounts of your Roth conversions, it's odd that you haven't received any notices for the IRS claiming that you have underreported your taxable income.

 

I must leave it to you to decide whether or not to file the delinquent forms.  The  IRS will likely charge the advertised $50 penalty for each Form 8606 that you failed to file if they discover that you have failed to file these forms and end up using your Forms 1099-R, Forms 5498 and your tax returns to substantiate that the Roth conversions were nontaxable.

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