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Level 2

IRA RMD adjustment for a basis

I took my first traditional IRA RMD in 2019.  When I get the tax form it will likely show that the entire distribution is taxable.  However, I have a small basis in the IRA (about 1% of the total value) due to non deductible contributions made over several years, all of which were properly reported at the time.  How do I ensure that I am not taxed on the non deductible portion of the distribution and then adjust the basis for next year?

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Level 15

IRA RMD adjustment for a basis

After enter the Form 1099-R reporting this distribution, click the Continue button on the Your 1099-R Entries page.  Answer Yes when TurboTax asks if you made nondeductible contributions to your traditional IRA, then enter or confirm your basis from (generally) line 14 of your most recent previously filed Form 8606.  Also, enter your 2019 year-end balance in traditional IRAs.  TurboTax will use this information to prepare Form 8606 Part I to calculate the nontaxable and taxable amounts of the distribution and will show the remaining basis on line 14 of your 2019 Form 8606.

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Level 15

IRA RMD adjustment for a basis

smwales257, was your distribution from an inherited IRA?  If so, you must prepare a Form 8606 outside of TurboTax to calculate the taxable amount, then enter the result into TurboTax.  TurboTax has a Show Me How To Do This when you indicate that the decedent had basis in nondeductible traditional IRA contributions.

 

If this was not a distribution from an inherited IRA, it seems that you have not clicked the Continue button on the Your 1099-R entries page to reach the questions you seek.

View solution in original post

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Highlighted
Level 15

IRA RMD adjustment for a basis

After enter the Form 1099-R reporting this distribution, click the Continue button on the Your 1099-R Entries page.  Answer Yes when TurboTax asks if you made nondeductible contributions to your traditional IRA, then enter or confirm your basis from (generally) line 14 of your most recent previously filed Form 8606.  Also, enter your 2019 year-end balance in traditional IRAs.  TurboTax will use this information to prepare Form 8606 Part I to calculate the nontaxable and taxable amounts of the distribution and will show the remaining basis on line 14 of your 2019 Form 8606.

View solution in original post

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Level 2

IRA RMD adjustment for a basis

Thank you for clarifying this.  Sounds like it will be very simple.  

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New Member

IRA RMD adjustment for a basis

I took an RMD in 2019 from an IRA in which I had tax basis from nondeductible contributions.  I read responses in the Community stating that after entering the information from the 1099-R, several screens would appear: asking about nondeductible contributions; asking for tax basis; and asking for FMV of IRAs at the year-end prior to the year in which you turn 70-1/2.  None of those screens come up.  It only asks if the IRA was inherited, if any of the distribution was transferred in Qualified Charitable Distributions (which it was in my case) and the amount thereof, and whether I transferred anything to an HSA (which I did not).  I am trying to find out where I enter the tax basis for this RMD.  Help!

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Expert Alumni

IRA RMD adjustment for a basis

The questions about non-deductible IRA contributions comes up in the IRA contribution section, not right after the 1099-R section. 

  1. Search for IRA contributions using the search box located in the upper right corner .
  2. Click on the Jump to link.
  3. Check the box showing that you contributed to a Traditional IRA.  
  4. The next screen asks you to verify that you contributed to a Traditional IRA, choose Yes.
  5. If you didn't contribute to the account in 2019, just enter $0. 
  6. The next screen asks if the contribution was a repayment of a retirement distribution, choose No.
  7. Answer the remaining questions according to your situation. After a few more questions you will be asked about non-deductible contributions in the past. 
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Highlighted
Level 15

IRA RMD adjustment for a basis

smwales257, was your distribution from an inherited IRA?  If so, you must prepare a Form 8606 outside of TurboTax to calculate the taxable amount, then enter the result into TurboTax.  TurboTax has a Show Me How To Do This when you indicate that the decedent had basis in nondeductible traditional IRA contributions.

 

If this was not a distribution from an inherited IRA, it seems that you have not clicked the Continue button on the Your 1099-R entries page to reach the questions you seek.

View solution in original post