Required Minimum Distributions

[Mech1]

I've made RMD's for the tax years 2018 & 2019 as a result of turning 70 1/2 years old. For a number of years that I made IRA contributions that were not deductible. I completed form 8606 in 2008 which is the last year that I made an IRA contribution. Should some amount of the nondeductible IRA amount be reducing the taxable amount of each year's RMD? Would that require an amended return for 2018 & 2019?

[KathrynG3]

It depends on your circumstances whether the taxable amount could have been reduced each year and whether Tax Years 2018 and 2019 should be amended.

It is possible that some portion of the IRA contributions would reduce the taxable amount of each year's RMD. Some IRA's are not deductible but still taxable depending on whether the investment was a traditional IRA or a Roth IRA. 

Use your last filed Form 8606 to determine this calculation. Click the article Where do I find Form 8606? for TurboTax instructions to capture these details.

IRS Publication 590-B Distributions for Individual Retirement Arrangements (IRAs) under the heading Distributions Fully or Partly Taxable has more details and worksheets if you wish to calculate the nondeductible portion yourself. 

[dmertz]

There is no question, you must amend your 2018 and 2019 tax returns to include Form 8606 to reduce the taxable amounts of your RMDs for those years and to reduce the amount of your basis carried forward from each of those years.  Even if you do not amend to claim a refund, you must reduce the amount of basis carried forward as if you had completed the 2018 and 2019 Forms 8606 properly for each of those years.  The tax code does not permit you to pick and choose which years you apply the basis.

[macuser_22]

I totally agree with @dmertz.    The tax law requires you to apply any 8606 basis to every IRA distribution.  You cannot skip distribution or you loose the basis as if you had applied it.

[richardR1]

does turbo tax do this calculation? My broker does not. he will simply do the calculation for rmd requird. how do i calculate using the offset from form 8606? is there an example in turbo tax or elsewhere or an example page you could direct me to? Thanks in advance

[JulieS]

Yes, TurboTax does this calculation for you if you provide all of the necessary details. 

Here's how to enter your basis (nondeductible contributions) in your traditional IRA:

1. Sign in to your TurboTax account.
2. Select Deductions & Credits, then Edit or Pick up where you left off.
3. Select Start or Edit to the right of Traditional and Roth IRA Contributions.
4. Check the boxes for the type of IRA accounts you have and select Continue.
5. Answer the next few screens according to your situation.
6. When you get to Any Nondeductible Contributions to Your IRA? answer Yes, then select Continue.
7. If you know your IRA basis, you can enter the basis as of December 31 of the prior year in the box provided.
8. If you aren't sure about your basis, select Easy Guide. The program will walk you through figuring out your basis. 
9. Continue through the section until you return to the Income Summary. 

There's a similar section for Roth IRA accounts that comes up right after the traditional IRA section.