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New Member
posted Mar 27, 2025 3:42:58 PM

IRA year-end value affecting taxes due?

There were NO distributions from a Traditional IRA nor was any RMD required, yet when I enter the 12/31/24 FMV, why does the amount of tax due increase?

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1 Best answer
Level 15
Mar 27, 2025 4:30:35 PM

The only reason that entering your year-end value in traditional IRAs would affect your tax due when you have entered no Forms 1099-R reporting distributions from traditional IRAs is if the year-end value was involved in determining the penalty for having made an excess traditional IRA contribution.  Check to see if you have Form 5329 Part III calculating such a penalty.  Also check to see that you have nothing on line 7 or 8 of a Form 8606 that would indicate that you entered a Form 1099-R that reports a distribution from a traditional IRA.

3 Replies
Level 15
Mar 27, 2025 4:30:35 PM

The only reason that entering your year-end value in traditional IRAs would affect your tax due when you have entered no Forms 1099-R reporting distributions from traditional IRAs is if the year-end value was involved in determining the penalty for having made an excess traditional IRA contribution.  Check to see if you have Form 5329 Part III calculating such a penalty.  Also check to see that you have nothing on line 7 or 8 of a Form 8606 that would indicate that you entered a Form 1099-R that reports a distribution from a traditional IRA.

New Member
Mar 28, 2025 8:47:46 AM

Thanks, but no Form 5329 or anything on lines 7 or 8 of the relevant Form 8606. However, on Form 8606, the box after line 3, Did you take a Distribution?, "No", indicates to go on to line 14, yet the rest of the Form is filled out as "Yes." How do I correct that? There were distributions from other IRAs / Annuities, but not this one.

New Member
Mar 28, 2025 9:31:13 AM

Update: I found the problem -- confusion between multiple payees checking the IRA / SEP / SIMPLE box, but not related to the Traditional IRA. The upside is nondeductible basis was not reduced; the downside is that additional taxes ARE due.