Impact of CARES Act on Form 8606

[Elra4569]

The software asks questions related to our IRA's and Form 8606.  Since we repaid the RMD's we took out in 2020, the software should not be asking if we need to fill out that form.  If we bypass that form however, will the data from 2020 pass through to 2021 as it should?  This seems to be an easy fix....just ask whether all of the RMD taken out was repaid, then update TurboTax to assure that the data is carried over to 2021 taxes.  Because if we answer "no" to questions about Form 8606 as it is now, there will be an error in 2021.

[dmertz]

The CARES Act had no impact on Form 8606.

Elra4569, as I think you found, the CARES Act removed the requirement that this distribution be made, so you must indicate to TurboTax that none of this distribution was a Required Minimum Distribution.

[Elra4569]

I think this is a flaw in the TurboTax SW.  The problem I see is that even though there is a 1099-R, we are supposed to say that this is not an RMD and that in turn would not change the 8606.  But the problem as I see it is if you do that, then I question whether the 8606 will transfer as is to 2021 taxes.  There should be a better approach to handling this situation. 

[dmertz]

TurboTax does not transfer Form 8606 itself from one year to the next.  Instead, TurboTax transfers from one year to the next the information needed to prepare the Form 8606 in whatever future year next needs Form 8606 to be prepared.  This information is retained on the IRA Information Worksheet which transfers from one year to the next no matter if a Form 8606 is prepared for a particular year or not.  If a Form 8606 is needed for a particular year, that updates the IRA Information worksheet so that the necessary information propagates forward.