Form 8606 Non deductible IRA tracking

[asc]

Thank you.  That is what I have done.  I guess I will have to submit revised 8606's for the years 2013-2016 that Turbotax dropped.  Is there anyway to do those electronically, or do I have to use paper?  

One comment -- the interview for Nondeductible Contributions says "Let us know if [name] made and kept track of any nondeductible contributions to [name] traditional IRA from 2016 or prior years. (this is not common).  It then says "Most people do not make or track any nondeductible contributions to their IRAs."   

While I would agree that most people do not MAKE nondeductible contributions to prior year IRAs, I strongly disagree that most people do not TRACK nondeductible contributions.  If this is how I lost the prior year reporting then this really needs to be fixed and the language changed.

[dmertz]

The late/revised Forms 8606 will have to be filed by mail.

If an individual never made nondeductible traditional IRA contributions or rolled after-tax basis from an employer plan to an IRA, the individual has no traditional IRA basis to track.  However, I agree that having nondeductible traditional IRA contributions should not be considered "uncommon" given the plethora of questions that appear on this forum regarding IRA basis, particularly now that so many people are making nondeductible traditional IRA contributions and are making subsequent Roth conversions to get around regular Roth IRA contribution limits because of high modified AGI.

[dwood003]

About 30 plus years ago the same individual for H&R Block Executive Service did my taxes and suggested I buy IRA’s for my wife and I to lower our tax rate which I did every year. He would send an appointment card reminder and suggested I could buy for the previous year and the present year which I did; when he looked at my wife’s W2 he informed me she was in a retirement program, a 401K, which we had discussed before, and had told her not to do , therefore I could not deduct them.

I started using TurboTax 20 plus years ago and 10 years ago when turning 70 ½ and required to make a minimum withdrawal, I established the basis for the non-deductible portion of my accumulated IRA’s and each year the program would retrieve the previous year’s Form 8606 data and the only thing I had to do was insert the 1099-R withdrawal amount and it would calculate a percentage of my non-deductible basis that was non-taxable . The bank would always send me my statement balance of Dec 31 of the taxable year and previous year which I never used.

This year changed from the previous 10 years, it asked me for the 2016 Dec 31 Basis which I believed they were asking for the remainder of the unused portion of the non-deductible IRA’s, when I used the balance of the 2016 and 2017 it was so “out of whack” from the previous years I thought there was something wrong with the program.

I had bought my TT CD program at an office supply store. the 4th TT agent had me delete my previously installed program and she downloaded a duplicate program, which claimed to be 100% accurate; the taxable portion was 10% of the non-taxable. I submitted it and 2 weeks later received a direct deposit in my checking account. At the rate TT had been calculating it previously I would have died before using all the non-deductible portion.

Had TT explained the changes it would have been helpful but left them possibly liable for the previous method.

[PS56k]

I stumbled across this a few years ago.... and had to re-establish the BASIS for tracking.
We took a very early retirement, and have not made IRA contributions for a couple of years.
Now - Nov 2018 - I'm thinking about doing a Roth Conversion - and again - have to wade thru the non-existent IRA tracking to find the last good BASIS numbers.  I would really like to have TT carry forward any and all IRA trackiing information, even if we stop making any IRA contributions - it's not like our IRA holdings just fell off a cliff....

[Critter]

My instruction to clients for IRAs is to keep the form 5498 they get for every tax year in a separate file along with the latest form 8606 if they had non deductible contributions ... making your own excel spreadsheet is wise and easy since you only have to make one entry on it annually.   The last form 8606 that you filed is all you ever need for a roll over in later years for the new form 8606.

[dmertz]

As I indicated in my answer, operated properly TurboTax does carry forward the basis tracking information, even through years when no traditional IRA transactions are made.  "Operated properly" means every year transferring the prior year's tax return file into current year's TurboTax to begin the current year's tax return and never telling TurboTax that you did not make nondeductible traditional IRA contributions, otherwise, as Critter#2 said, you'll need to reenter the carried-forward basis from your most recently filed Form 8606, the only thing that is needed to reenter your basis amount into TurboTax.

[macuser_22]

However, TurboTax does not always operate properly as I found out a year ago when my wife had to take her first RMD.   Her carry forward basis was zero in TurboTax but my basis was fine.   I traced that back to 2012 where the IRA Info worksheet showed the correct carry forward basis for both my IRA and my wife's IRA, but when transferred to 2013, my IRA basis was correct, but my wife's basis was zero, so zero carried forward after then.   Why my basis transferred, but my wife's did not, I have no idea (and no, I have not tried to reproduce it since those tax years are long gone so it would be useless to report a bug in 2012 or 2013).   

 But losing basis can happen, even if you transfer every year since it happened to me and it is not obvious that the IRA info worksheet is incorrect if no IRA distribution was taken.

[nlassman]

how do i use form 8606 with turbo tax delux

[tc32]

same question. And, the last 2 years I have withdrawn from my Roths. TT did not generate a 8606 for either of us and looks like it won't this year. Why?

[AmyC]

The form 8606 tracks your contributions to a traditional IRA. distributions from a ROTH IRA and when funds are converted. If it is a year with none of these, the form is not used. Here is Form 8606 (PDF)

See Where do I find Form 8606?

@nlassman 

 @tc32 It sounds like you should have had 8606 in your returns. You should go back and create the 8606 and send it in. You can mail the 8606 separately. See Instructions for Form 8606 (PDF)  Go back to your old returns, download as if you will amend. You will not amend, just force the 8606 and print it.

[cptt21]

I made a $20k IRA conversion to a Roth IRA but the program is not generating an 8606 form. 

Why? How can I fill out the 8606?

[dmertz]

If you converted from a traditional IRA to a Roth IRA and enter the Form 1099-R correctly, TurboTax will generate Form 8606 to report the conversion.

If the Form 1099-R from the payer has the IRA/SEP/SIMPLE box marked, make sure that you have marked this box on TurboTax's 1099-R form.  If the IRA/SEP/SIMPLE box on the Form 1099-R provided by the payer is not marked, the distribution was from a qualified retirement plan like a 401(k) , not from an IRA, and is not reportable on Form 8606.

[wghecox]

I have the same issue. I was just about to file my 2020 tax return and remembered Non-Deductible IRA.

Why is this information not copied forward when I import last years TAX info.

WHY ??

[MarilynG1]

@wghecox The Form 8606 is normally only generated when you report a non-deductible IRA contribution, distribution, or conversion.

You need to keep your most recent 8606 on hand, since you may not get one each year.

Click this link for info on How to Trigger Form 8606. 

[Gleam55]

When TT asks for net conversions to a ROTH IRA for 5+ years ago, are recent withdrawals subtracted from the contributions?  If the dividends gained from the conversion are withdrawn are they subtracted from the conversion as well?