If I failed to include IRA basis year-after-year (on Form 8606, line 2) but made regular nondeductible IRA contributions, should I simply correct it in my 2019 return?

[drshmed]

I have failed to include info on previous years, but have made no withdrawals and I do not believe this missing info has had any impact on my tax return.

2nd question: when calculating tax basis for nondeductible IRAs, does one also need to include the cost for reinvested dividends/gains?

Thank you!

[macuser_22]

No.    The IRS requires a separate 8606 for for EACH year that a a non-deductible contribution made file on the 8606 for that year.    If you did not deduct it and have not other change to make to your tax return then you can simply mail in the missing 8606 for for that year.  If the IRS does not receive a 8606 for any year then they can deny the non-deducible basis.   Also note that there is a $50 penalty for each missing 8606.   You can include request to waive that penalty if there is a reasonable reason.  Don't just pay, it but let the IRS bill you if they do.

You can get past years 8606 form here.

https://apps.irs.gov/app/picklist/list/priorFormPublication.html;jsessionid=5rZTMtyGvGTvEBcUGBG_bO3p...

[drshmed]

Thank you.  I was not clear.....

I DID submit Form 8606 each year. But the basis listed on Line 2 said "0" on each form.

Does that require resubmitting a Form 8606 for every year?  It would have no impact on my tax returns other than following the basis year over year.

Thanks.

[macuser_22]

Line 2 should have been the carry over basis from line 14 of the last prior 8606.   If you did not do that AND you have not taken ANY Traditional IRA distributions, then I would simply file a 2019 8606 with the correct carry forward basis in line 2 and 14 and include an explanation of the change.  (You probably should file an amended 8606 for each year, but I doubt that the IRS will care.   And there is no penalty for amending an 8606.)

If you HAVE taken a prior IRA distribution then the 8606 filed with that distribution and the resulting taxable amount on your 1040 would be incorrect, requiring an amended 1040X and 8606 for that year and amended 8606 form for each following year.

[drshmed]

Thank you. That was my assumption. Where does one put in the explanation?

[macuser_22]

On a piece of paper attached to your mailed tax return.

If using the desktop version, in the forms mode on the 8606 box between line 1 and line 2, click the explanation box.    I do not know of a way in the online versions to do that.