I neglected to file my non deductible IRA contributions on an 8606 for many years ....Is there anything I could do now???

[Stevehofwa]

Thanks.  I always filed the 8606, just not correctly.  One of the complications was that I would make the contribution to the non deductible IRA in the next year (prior to April 15), allowable but not a good idea because it makes the documentation confusing.  So I’ve figured out how the 8606s should have looked.   The key things are that, I never paid tax on any distributions, and I always did what was allowed.  But it’s not documented correctly. So I could redo all of the 8606s that were wrong and submit them with an explanation -is there any potential harm in doing that(other than the $50, if that counts for wrong 8606)?

[Stevehofwa]

So line 15b was always zero , and I always got the refund I expected, no notices.  So I guess the IRS never noticed, which I suspect happens a lot.

[dmertz]

I see.  In exactly what way did you prepare the Forms 8606 incorrectly?  Did any show the proper carryforward from line 14 of one year's Form 8606 to line 2 of the next year's form?

[macuser_22]

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@Stevehofwa wrote:

 One of the complications was that I would make the contribution to the non deductible IRA in the next year (prior to April 15), allowable but not a good idea because it makes the documentation confusing.

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If you look at the 8606, is there a * next to line 15?   If so then the calculations were done on the "Taxable IRA deduction worksheet" and not the 8606 form.   While this seems to be contrary to the 8606 instructions, the IRS, on that worksheet (IRS Pub 590B worksheet 1-1) does seem to allow applying contributions before the due date the next year, to be applied to, and offset, the tax, on the current years distribution/conversion. 

You might not have any problem.

https://www.irs.gov/publications/p590b#en_US_2019_publink1000230851

[Anonymous]

Hi,

I was new to the country and failed to file form 8606 in 2019. I recently just mailed it in by itself to the Fresno California address (I live in Washington). I then e-filed my 2020 return using Turbotax where I included the 2019 IRA basis and got rejected. I'm wondering 1) should I wait a bit longer before I e-file so that the mailed-in 8606 could be processed? 2) is there anywhere I could check the status of the 8606 processing? 3) did I mail it to the correct address? I mailed to the regular 1040 address, not the amendment address. 4) is there any way I could e-file only the 2019 8606 form?

Thanks in advance for your answers,

Lin

[dmertz]

The rejection of your 2020 tax return had to do with a recent TurboTax bug, now corrected, not anything to do with your 2019 Form 8606.

[Anonymous]

is the bug for the CD/Mac version too? That’s what I am using. The rejection did mention IRA so I don’t think it’s purely because of the bug. Are you saying they would accept my 2020 8606 without having processed 2019 8606? 

[dmertz]

If you have updated to the latest version of TurboTax, your e-filing should no longer be rejected as of sometime on March 5.

The e-filing rejection process for a 2020 tax return does not look at anything about your 2019 tax return.

[Anonymous]

Thanks a lot! I tried again and got accepted 🙂

[mip63]

Seems everyone's 8606 issues are special.  I've properly filed the 8606 each year required but with the wrong Basis, like so many others.  There is no change in any non-deductible contribution for any years from 2004 to 2015 to be corrected on the 8606.  Made no contributions, deductible or non-deductible since 2015.  No distributions have ever been made.  So, all those old form8606 are on "closed" tax returns.  Already filed my 2020 Tax return and it has been accepted.  Wanted to amend my return and add a 8606 with "0" contribution with the corrected Basis for 2020.  Shouldn't I just send a tax year 2020 form 8606 alone to the IRS with a written notice "this is corrected Basis from last filed 8606 in 2015"?  Can I send it with my spouses, since both have the wrong Basis, since there isn't any over or under payment of taxes for any year?   I want to get the basis correct this year as I'm planning some recharacterization of the non-deductible portion to a Roth IRA.  I just realized the Basis error this past month.

TurboTax doesn't have the 1040X ready at this time.  If needed, when will TT have the 1040X form?  there will be no changes on any line of the 1040X.

What is the simplest way to do this?  I have all past years 8606 with corrected Basis but worry about sending too much detail to the IRS.  Some posts just state to send the current year 8606 with that explanation.

[macuser_22]

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@mip63 wrote:

Seems everyone's 8606 issues are special.  I've properly filed the 8606 each year required but with the wrong Basis, like so many others.  There is no change in any non-deductible contribution for any years from 2004 to 2015 to be corrected on the 8606.  Made no contributions, deductible or non-deductible since 2015.  No distributions have ever been made.  So, all those old form8606 are on "closed" tax returns.  Already filed my 2020 Tax return and it has been accepted.  Wanted to amend my return and add a 8606 with "0" contribution with the corrected Basis for 2020.  Shouldn't I just send a tax year 2020 form 8606 alone to the IRS with a written notice "this is corrected Basis from last filed 8606 in 2015"?  Can I send it with my spouses, since both have the wrong Basis, since there isn't any over or under payment of taxes for any year?   I want to get the basis correct this year as I'm planning some recharacterization of the non-deductible portion to a Roth IRA.  I just realized the Basis error this past month.

TurboTax doesn't have the 1040X ready at this time.  If needed, when will TT have the 1040X form?  there will be no changes on any line of the 1040X.

What is the simplest way to do this?  I have all past years 8606 with corrected Basis but worry about sending too much detail to the IRS.  Some posts just state to send the current year 8606 with that explanation.

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No "easy" way.   8606 years do  not close like tax years do.

Incorrect 8606's can be amended and corrected as far back as 1987.

You need to fill out and mail a corrected 8606 starting with the first year of the error on the 8606 for that tax year.   Using the carry forward basis in  that 8606 to apply to the next years 8606.

You can mail them together with an explanation of why you are amending  them.  You should mail certified with return receipt since the IRS will not acknowledge any other way.

You can download blank 8606 forms for any year back to 1987 here:

https://apps.irs.gov/app/picklist/list/priorFormPublication.html?indexOfFirstRow=0&sortColumn=sortOr...

Also if you had a distribution for 2017 to present and had a distribution requiring a 8606 then you would need to amend that to report the correct taxable amount.

If you owe additional tax on Any distribution back to 2011 (10 years) you might also need to amend them -  the 3 year statute of limitations applies to tax owed to you, if  you owe additional tax the IRS can go back 10 years.  But the IRS would sent a letter if they require that.

[mip63]

Thank you very much, this was helpful.

[momrose]

I don't see my exact situation addressed in this thread either. I have never filed a Form 8606 because I never realized that I needed to. I have been doing my own taxes all my life (I'm 69 and retired) and I don't use tax preparation software, so I was just ignorant of the requirement.

I have done partial Roth conversions from traditional and rollover IRAs in several of the past years, but there were NEVER ANY non-deductible contributions in the IRAs that were being converted. I have treated all of the Roth conversions as fully taxable distributions from my IRAs, and as such I have always paid all of the taxes due on the amounts converted. If I were to file the required Forms 8606 for the several previous years in order to comply with the filing requirement, would I be likely to incur the $50 penalty per year for failure to file?

One additional complication: in 2018 I took a distribution from a Roth IRA rather than adding to it. I couldn't figure out where to report that distribution on my income tax forms, and so I just left it off, because I knew it was not taxable. I see now that it probably should have been reported on Form 8606 as well. Once again, if I belatedly file an 8606 for 2018 it will not change my tax liability. 

I am not looking forward to incurring several $50 penalties for cleaning up my bookkeeping oversight. Please tell me that the IRS is likely to waive these penalties since I paid all the taxes I owed! 

[macuser_22]

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@momrose wrote:

I don't see my exact situation addressed in this thread either. I have never filed a Form 8606 because I never realized that I needed to. I have been doing my own taxes all my life (I'm 69 and retired) and I don't use tax preparation software, so I was just ignorant of the requirement.

I have done partial Roth conversions from traditional and rollover IRAs in several of the past years, but there were NEVER ANY non-deductible contributions in the IRAs that were being converted. I have treated all of the Roth conversions as fully taxable distributions from my IRAs, and as such I have always paid all of the taxes due on the amounts converted. If I were to file the required Forms 8606 for the several previous years in order to comply with the filing requirement, would I be likely to incur the $50 penalty per year for failure to file?

One additional complication: in 2018 I took a distribution from a Roth IRA rather than adding to it. I couldn't figure out where to report that distribution on my income tax forms, and so I just left it off, because I knew it was not taxable. I see now that it probably should have been reported on Form 8606 as well. Once again, if I belatedly file an 8606 for 2018 it will not change my tax liability. 

I am not looking forward to incurring several $50 penalties for cleaning up my bookkeeping oversight. Please tell me that the IRS is likely to waive these penalties since I paid all the taxes I owed! 

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You only need a 8606 if you made a non-deductible Traditional IRA contribution or took a distribution for Traditional IRA with a non-deductible basis.

If you have not made any non-deductible contributions then no 8606 is needed.

[momrose]

You only need a 8606 if you made a non-deductible Traditional IRA contribution or took a distribution for Traditional IRA with a non-deductible basis.

If you have not made any non-deductible contributions then no 8606 is needed.

Are you sure that I wouldn't need to file a Form 8606 if I have no non-deductible contributions? The instructions for the 2020 Form 8606 state 
Who Must File
File Form 8606 if any of the following apply.

... 

• You converted an amount from a traditional, SEP, or SIMPLE IRA to a Roth IRA in 2020.
• You received distributions from a Roth IRA in 2020 (other than a rollover, recharacterization, or return of certain contributions—see the instructions for Part III, later). 

Those two bullet points don't mention anything about non-deductible contributions, although the bullet points before them do. 

I have converted amounts from traditional IRAs in 2020 and in several previous years, and I have taken a distribution from a Roth IRA in 2018. It seems like those actions fit the bulleted requirements, at least for the 2020 tax year.