2 IRAs - inherited IRA from dad & my traditional IRA w/basis. 8606 asks value ALL traditional IRAs. Include both? Will basis reduce each year since i take Inherited RMD?

[Wampuskat-8]

-I have an inherited IRA from my dad and I take RMDs each year.
-I have my own traditional IRA with basis (I made non deductible contributions.....not in 2018....prior to 2018)
-I have NOT taken any distributions from my Traditional IRA (just my inherited IRA).
-I have NOT done any type of ROTH conversions.
-I have filled out 8606 (attached).

My questions:

-Line 6 8606 asks for value of ALL traditional IRAs. Does that mean my inherited IRA AND my own traditional IRA? Or just my traditional IRA?
-Since I am taking an RMD from my inherited IRA, am I now getting credit for my non deductible contributions based on some complex formula (I've attached my 2018 8606)? I knew I would but thought it would be when I started withdrawing from my IRA. I didn't think about my inherited IRA triggering it now.
-Finally, if the above is correct then am I also correct in saying that my basis will now reduce each year as I take credit for a piece of it (Line 12 and 14)?

[Wampuskat-8]

Is there a limit on characters when replying to you? I'm trying to and hit Comment when done but nothing happens.

[dmertz]

I've never encountered a limit on the number of characters for a comment.

[Wampuskat-8]

Thx. After entering my 1099R info for my inherited IRA RMD, TT asks: ANY NON DEDUCTIBLE CONTRIBUTIONS TO ROBERTS IRA? Let us know if Robert made and kept track of any non deductible contributions to Roberts Traditional IRA from 2017 or prior years. (This is not common.)

While I didn't in 2018 I have in 2017 and in prior years. I report this basis to this question.

Clearly, TT is mingling my inherited IRA with my traditional IRA info and it's showing on form 8606. Lines 2-6 shows correct info for my traditional IRA and value. All correct. But Lines 7-15a show inherited IRA info.

I've been taking the inherited RMD for about 5 years. Every year I fill out this portion and have never had this problem. Why it's mingling now I just don't know.

[Wampuskat-8]

Thx. After entering my 1099R info for my inherited IRA RMD, TT asks: ANY NON DEDUCTIBLE CONTRIBUTIONS TO ROBERTS IRA? Let us know if Robert made and kept track of any non deductible contributions to Roberts Traditional IRA from 2017 or prior years. (This is not common.)

While I didn't in 2018 I have in 2017 and in prior years. I report this basis to this question.

Clearly, TT is mingling my inherited IRA with my traditional IRA info and it's showing on form 8606. Lines 2-6 shows correct info for my traditional IRA and value. All correct. But Lines 7-15a show inherited IRA info.

I've been taking the inherited RMD for about 5 years. Every year I fill out this portion and have never had this problem. Why it's mingling now I just don't know.

[dmertz]

As long as you told TurboTax that the distribution from the inherited IRA was from an inherited IRA, TurboTax is not commingling anything about the inherited IRA with your own.  TurboTax asking you to determine and provide the taxable amount of the distribution from the inherited IRA yourself substantiates that.  TurboTax has no way for you to provide any of the details of needed for the calculation of the taxable amount of a distribution from an inherited IRA, so TurboTax just asks for the taxable result of your own calculation.  The only Forms 1099-R that TurboTax includes on Form 8606 lines 7 or 8 are those that you failed to tell TurboTax were distributions from an inherited IRA.  If an amount from a Form 1099-R reporting a distribution from an inherited IRA is appearing on Form 8606 line 7 or 8, delete and reenter the Form 1099-R.

Since you originally only mentioned you having basis in nondeductible contributions, not your dad having basis, my answer assumes that your dad had no basis in nondeductible traditional IRA contributions.  If that assumption is correct, simply enter the entire gross amount of the distribution when TurboTax asks for the taxable amount of the distribution from the inherited IRA.

[Wampuskat-8]

As you suggested, I deleted the 1099R info for my inherited IRA and imported again from Vanguard. Still populating my inherited IRA info on my 8606 and using the info to adjust my basis of my traditional IRA and changing the taxable portion of my inherited RMD. I deleted it again and manually entered. Still same outcome. I'm clearly showing the inherited RMD is fully taxable and that it is inherited. It's my understanding that my 1099R inherited IRA info should not populate the 8606 since there is no basis. So question is why is it populating on the 8606? And, yes, my dad has no basis in non deductible IRA contributions for the IRA I inherited from him. Again, I've been reporting this every year for the last 5 years. I've never had this problem.

[dmertz]

Make sure that you edit the Form 1099-R and explicitly tell TurboTax that it's an inherited IRA.  If that doesn't help, delete the Form and enter it manually.  A distribution from an inherited traditional IRA will have code 4 in box 7, but TurboTax still needs you to confirm that it's a distribution from an inherited IRA, otherwise TurboTax will treat is as a distribution from your own IRA.

[dmertz]

Line 6 is only to include the year-end balance of your own traditional IRAs.  Do not include the balance in the inherited IRA.

Since the inherited IRA has no basis in nondeductible traditional IRA contributions, the entire gross distribution from the inherited IRA is taxable income.

If you made no distributions or Roth conversions from your own traditional IRAs, you'll only have a Form 8606 if you made a new nondeductible contribution for 2018 and there will no taxable amount calculated on Part I or Part II.