If both spouses took IRA distributions, both have non-deductible basis and the IRA info wks data is correct for both spouses, why is the 8606-T created but not 8606-S?

[cindydi]

IRA Info Worksheet has values in lines 1, 2, and 3 for both Taxpayer and Spouse.  Both has basis carryover from 2019.  Both taxpayers took distributions from their IRAs. The values in the IRA Info Worksheet are accurate.  But only the 8606-T is generated.  I cannot get the 8606-S to generate.

[macuser_22]

Be sure you chose the proper spouse for the 1099-R.  Edit it to be sure it is assigned to the proper spouse.

[cindydi]

I have verified that all IRA distributions are correctly assigned to the correct person.  Thanks for that, as in one of my earlier reviews I did notice that Spouse's distribution had been tagged as Taxpayer's, but when I corrected it, it didn't create an 89606-S.  The 1099-R Summary reflects Total gross distributions from Box 1 of Form 1099-R has values for both spouses.  Taxpayer had a normal distribution, Spouse had a distribution from an Inherited IRA.  Is that the reason?  Even though a distribution from an Inherited IRA is taxable, is it treated differently than a regular distribution regarding form 8606?  

[cindydi · Accepted solution]

The distribution code seems to be the answer, even though I don't see Inherited IRA distributions listed as a reason to not count them for the 8606.  To test this theory, I just manipulated the spouse's 1099-R, changing the distribution code from 4 (death) to 7 (normal), which caused our refund value to increase and created an 8606-S.  When I changed the distribution back to the correct value of 4, the refund value decreased to the earlier value and the 8606-S form disappeared.  It would be nice if Turbotax continued to the screen that allowed the customer to view and answer the question about having made nondeductible IRAs, then tell the customer that it will be treated differently because it's from an Inherited IRA.  Or created a screen that said because the taxpayer / spouse had distributions only from Inherited IRAs, form 8606 does not apply.  I have spent many hours trying many thing including repeating imports and adding in a fake IRA overcontribution to try to figure this out.  The IRS forms that don't mention that Inherited IRAs don't count were not helpful unfortunately, so I'm hoping Turbotax will fill in the gap!

[dmertz]

The instructions for completing Form 8606 refer to IRS Pub 590-B which indicates that anything in regard to an inherited IRA is not to be included on a Form 8606 that reports distributions from the individual's own IRAs.  The instructions also state the if the decedent had basis in non-deductible traditional IRAs, distributions from the inherited IRA must be reported on a Form 8606 separate from the beneficiary's own Form 8606.

[macuser_22 · Accepted solution]

And TurboTax cannot create that 8606 for the inherited IRA

.

If the inherited IRA had a basis and you have the deceased's  last filed 8606 line 14 amount then you must fill out a paper 8606  manually.  Figure out the taxable amount and enter that in the TurboTax interview for the inherited IRA where TurboTax asks for it.  The print and mail your return with the 8606 attached.