Is it possible to characterize a Traditional IRA for which no tax deduction was received?

[rmk9785e]

I contributed to a traditional IRA about 10 years ago but didn't file taxes that year and thus received no tax deduction so the money in that IRA is already taxed. Is it possible to characterize it as ROTH without having to pay tax twice on the same amount? If so, what would be the process?

[Critter]

If you convert it to a ROTH then you will indicate the basis when asked in the 1099-R  interview. 

[rmk9785e]

My question is about how to convert and existing Traditional IRA to Roth without double taxation. I assume by 1099-R interview, you're talking about the process of filing taxes which would take place after the conversion has been done. I understand that 1099-R is issued when one receives distributions and there is no distribution involved in my query.

[Critter]

You will get a 1099-R for the conversion ... so when you enter it in the program you will indicate the basis.

[rmk9785e]

These answers seem to be about where to enter info while filing taxes in Turbotax. That doesn't answer my question which is whether I can do the conversion of a 10 years old non-deducted Traditional IRA.

[VolvoGirl]

You will pay tax on the amount over what you contributed.  What you contributed and didn't deduct is your basis.

[macuser_22]

@rmk9785e  Whether you just take a distribution or convert to a Roth the taxation calculation is the same.

If you made a non-deductible Traditional IRA contribution then you were required to file s 8606 form for the year that the contribution was made.     If you failed to do so then you can file a standalone 8606 late and attach a request to waive the $50 penalty for failing to file the form at the time.

You will need the 8606 line 14 amount when reporting the Roth conversion.

You will receive a 1099-R for the distribution/conversion:

Enter a 1099-R here:

Federal Taxes,
Wages & Income
(I'll choose what I work on - if that screen comes up)
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR Use the "Tools" menu (if online version left side) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]

You will be asked of you had and tracked non-deductible contributions - say yes. The enter the amount form the last filed 8606 form line 14 if it did not transfer. The enter the total value of any Traditional, SEP and SIMPLE IRA accounts that existed on December 31, 2018.

That will produce a new 8606 form with the taxable amount calculated on lines 6-15 and the remaining carry-forward basis on line 14.

[rmk9785e]

The last 2 answers are very helpful.

A clarification here "If you made a non-deductible Traditional IRA contribution...." The intent was not to make non-deductible contribution. It could not be deducted because taxes were not filed in time for the deduction to be taken, therefore the funds in this Traditional IRA being post-tax. 

I hope the answer provided about the process still applies.

[macuser_22 · Accepted solution]

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@rmk9785e wrote:

The last 2 answers are very helpful.

A clarification here "If you made a non-deductible Traditional IRA contribution...." The intent was not to make non-deductible contribution. It could not be deducted because taxes were not filed in time for the deduction to be taken, therefore the funds in this Traditional IRA being post-tax. 

I hope the answer provided about the process still applies.

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Yes.  It is too late to amend for a contribution made 10 year ago to take the deduction now so it is  non-deductible after tax  "basis".

You can obtain past years 8606 forms (you should use the form for the year that the contribution was made) to report that basis.  Then when you take a IRA distribution/conversion it would be entered as in my answer above.

Get past 8606 and instructions here:

https://apps.irs.gov/app/picklist/list/priorFormPublication.html;jsessionid=0bdyRxDbhQhzJH1ZOAnWKbaQ...