How to fix my previous year basis for traditional IRA?

[chip-designer]

My 2016 traditional IRA basis is wrong.

I entered the correct value, and turbo tax say "the IRA basis we transferred from 2016 is different from the basis entered. Include a brief explanation of why your IRA basis changed with your return"

Is this enough? is the explanation also sent to IRS?

Or do I need to fix "amend" last year return to correct my trad IRA basis?

[dmertz]

The answer depends on whether or not your error in reporting the basis on your 2016 tax return affected the taxable amount of any 2016 traditional IRA distributions or Roth conversions.  If it did, you must file an amended 2016 Form 8606 along with Form 1040X.  Even if you did not have any traditional IRA contributions or Roth conversions in 2016, filing an amended 2016 Form 8606 with Form 1040X would be the most proper way to make the correction since it explicitly shows that your 2016 tax liability is unaffected.

If you file a corrected 2016 Form 8606, you would then provide to TurboTax as your basis carried in from 2016 the correct amount from line 14 of the amended 2016 Form 8606 and not provide any explanation for basis adjustment with your 2017 tax return.

If you do provide an explanation with your 2017 tax return, it will be included in your filing.

[chip-designer]

Hi Dmertz.

I did not make any IRA distributions or made ROTH conversions in 2016, and I was NOT qualified  to deduct my contributions because my MAGI was above the limit.

You said about filing an amended 2016 Form 8606 with Form 1040X would be best.  Can this be done inside turbo tax too? and can I file it electronically (inside turbo tax) as well?
Can I file this amended 2016 Form 1040X with 8606 return before the april 15 deadline?

Thanks

[macuser_22]

Amended returns can only be mail filed.  There is no rush to amend since amended returns can take up to 4 months to process.  

It is suggested that it be mailed certified with return receipt (or other tracking service) to verify that the IRS receives it.

<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/1894381-how-to-amend-change-or-correct-a-return-you-already-filed"...>

<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/replies/3288565">https://ttlc.intuit.com/replies/3288565</a>

[Nellienell1979]

How do I amend my 2017 w2s

[KarenM90]

I assume you are referring to changing your 2017 W2 amounts in Turbo Tax.  In order to do that, you will need to amend your tax return.  

To Amend your return in Turbo Tax Online follow these steps:

1.  Sign in to your Turbo Tax Account

2.  Scroll down to  Your tax returns and documents and select Amend (change) 2017 return, then Amend using Turbo Tax Online.

3.  Select the reason you are amending and Continue

4.  Answer the questions about your Federal return then begin amending your State return when it says "Lets get started on your state taxes...." (Please note that you only need to make changes to the areas needed - ie adding the additional W2 - you will not need to change any other areas of the return.  

It does take up to 12-16 weeks for more for Amended returns to be processed.

If your W2's, issued by your employer(s) were incorrect, you will need to contact the employer and request that the incorrect information be corrected and a "Corrected" W2 be issued, then you can amend that return using Turbo Tax.

Here is a link with more details about amending a prior year tax return:  Amending a Prior Year Tax Return

[dilevincent]

Hi Dmentz,

I have been making backdoor Roth IRA contributions (converting nondeductible/after-tax traditional IRA contributions) since 2018.  

For 2018, i made $5,500 contribution in early 2019.  since i contributed in 2019, I didn't receive the 1099-R for $5500 for 2018 so i forgot to file for 2018.

For 2019, i made $6000  contribution in early 2020.  I received 1099-R $5500 for 2019 but i forgot this contribution was for 2018 and i filed for $5500 for 2019.  But the $6000 contribution for 2019 was not filed.

For 2020, i made $6000 contribution before end of 2020.  Since i made $6000 contribution in early 2020 for 2019 and another $6000 end of 2020 for 2020, i received 1099-R for 2020 for $12,000.

How should i make the correction in Turbo Tax to reflect the correct contributions for each year?

Thanks,

Vincent

[DanaB27]

To clarify, you contributed $5,500 in 2019 for 2018 and had the conversion in 2019. Then you contributed $6,000 in 2020 for 2019 and converted it in 2020. Finally, you made a contribution in 2020 for 2020 and also converted it in 2020.

The $5,500 contribution will have to go on your 2018 tax return, the $6,000 contribution on your 2019 return and again a $6,000 contribution on your 2020 return (Please see How to amend (change or correct) a return you already filed).

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “traditional IRA”
4. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
5. Enter the amount you contributed
6. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
7. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount.

To enter the conversion on your 2019 tax return:

1. Click on "Search" on the top right and type “1099-R”
2. Click on “Jump to 1099-R”
3. Click "Continue" and enter the information from your 1099-R
4. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
5. On the "Your 1099-R Entries" screen click "continue"
6. Answer "yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
7. Answer the questions about the basis ($5,500) and value

To enter the conversion on your 2020 tax return:

1. Click on "Search" on the top right and type “1099-R”
2. Click on “Jump to 1099-R”
3. Click "Continue" and enter the information from your 1099-R
4. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
5. On the "Your 1099-R Entries" screen click "continue"
6. Answer "yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
7. Answer the questions about the basis ($6,000) and value

@dilevincent

[dilevincent]

Thank you, Dana, for your guidance.

I went back to check my return for 2018 and noticed I filed correctly for the $5500 so no action is requires for 2018.

For 2019 (tax year):

2/20/20: 2019 IRA contribution $6000

For 2020 (tax year):

2/21/20: 2019 Roth conversion $6000

12/9/20: 2020 IRA contribution $6000

12/9/20: 2020 Roth conversion $6000

I have a couple more questions:

For 2019 tax year, originally the $5500 (but should be $6000) was filed under “Traditional and Roth IRA Contributions” in “Deductions & Credits”.  Your guidance is to amend it under “IRA, 401(k), Pension Plan Withdrawals (1099-R)”.  I am assuming I will have to enter for 1 gross distribution as $6,0000 and for 2a Taxable amount as $6,000 – please confirm? Note:  My 2020 1099-R shows for 1 gross distribution as $12,0000 and for 2a Taxable amount as $12,000:  $6000 for 2019 and $6000 for 2020.

Also, what do I do with the originally file under “Traditional and Roth IRA Contributions” in “Deductions & Credits” for $5500?

For 2020 tax year, I have not filed yet.  My 2020 1099-R shows for 1 gross distribution as $12,0000 and for 2a Taxable amount as $12,000:  $6000 for 2019 and $6000 for 2020.

Under “IRA, 401(k), Pension Plan Withdrawals (1099-R)” as you recommended, what should I enter for 1 and 2a?

Should I also file the $6000 contribution and conversion in “Traditional and Roth IRA Contributions” in “Deductions & Credits” section? 

I appreciate your advise.

Vincent

[DanaB27]

The contributions are enter under IRA contributions under Deductions and Credits.

And the conversions are entered when you enter the 1099-R you received in the 1099-R section.

For the 2019 tax year, the $5,500 is the nondeductible contribution for the prior year (2018). You have to enter the basis (Nondeductible contributions from prior year) and the value of the traditional IRA during 1099-R section interview. You did a conversion in 2019 and got a 2019 1099-R, correct?

For the 2020 tax year, you will enter the 1099-R as shown on the Form. Yes, you will have to enter the contribution for 2020 ($6,000) under IRA contribution and then enter the 1099-R. In the 1099-R section you will have to enter the the prior year basis from 2019 and the value of the traditional IRA.

@dilevincent

[dilevincent]

Hi Dana,

Thank you for the explanation.

Based on the new information you provided, I believe I need to amend for 2018 tax year as well. 

Below are my contributions and conversions for 2018-2020:

2018 (tax year):

• on 4/8/19: 2018 IRA contribution $5500 (received 1099-R in year 2020)

2019 (tax year):

• on 4/9/19: for 2018 Roth conversion $5500 (received 1099-R in year 2020)
• on 2/20/20: 2019 IRA contribution $6000 (received 1099-R in year 2021)

2020 (tax year):

• on 2/21/20: for 2019 Roth conversion $6000 (received 1099-R in year 2021)
• on 12/9/20: 2020 IRA contribution $6000(received 1099-R in year 2021)
• on 12/9/20: for 2020 Roth conversion $6000 (received 1099-R in year 2021)

Information:

For 2018 tax year - I filed $5500 contribution in the “DEDUCTIONS & CREDITS” section.  However, I did not file “IRA, 401(k), Pension Plan Withdrawals (1099-R)” section because I did not receive the 1099-R until 2020.

For 2019 tax year – since I received the 1099-R for $5500 (suppose to be for 2018), I filed under 2019.  I entered $5500 in the “DEDUCTIONS & CREDITS” and “IRA, 401(k), Pension Plan Withdrawals (1099-R)” section.

For 2020 tax year - I receive the 1099-R for $12000 ($6000 for 2019 and $6000 for 2020).

To amend 2018 and 2019 tax years plus file for 2020 tax year, I need to do the following in Turbo Tax – Please confirm.

• For 2018 tax year 
  • For the “DEDUCTIONS & CREDITS” section, currently it has $5500.  I do not need to amend this section.
  • For the “IRA, 401(k), Pension Plan Withdrawals (1099-R)” section, I do not need to amend this because I didn’t receive my 1099-R until year 2020

• For 2019 tax year 
  • For the “DEDUCTIONS & CREDITS” section, amend the contribution from $5500 to $6000. 
  • For “IRA, 401(k), Pension Plan Withdrawals (1099-R)” section, it currently has $5500.  I don’t need to update this section because I am filing based on the 1099-R in received.

• For 2020 tax year 
  • For the “DEDUCTIONS & CREDITS” section , I need to enter $6000 that i contributed
  • For the “IRA, 401(k), Pension Plan Withdrawals (1099-R)” section, I will enter the value as shown on the 1099-R for $12000.  

Please confirm the corrections above are correct.

I appreciate your help!

Vincent

[macuser_22]

In order to utilize non-deductible contributions you must file a 8606 for each tax year for which a non-deductible contribution was made starting the first year.    They are accumulative meaning that each 8606 shows the new contribution for that tax year and the total of all prior years non-deductible contributions not yet utilized.  Any tax year there there was neither a non-deductible contribution or distribution does not need a new 8606 - the last filed 8606 remains in effect.    Any distribution will reduce the total non-deductible contributions by the ratio of non-deductible contributions and the total remaining value of all existing Traditional IRA accounts at year end.

Any non-deductible contribution not reported on a 8606 cannot be applied to distributions and is forfeited.    There is also a $50 penalty for each missed 8606 form that the IRS can waive if good reason for missing the 8606.