Turbo confusedTotal IRA contribution 2018 $0 , above total contribution 2019 $6500. Does not allow a deduction or decrease tax. Reverse contribution $6500, $0 reduces tax

[greenjaggernut]

Tell us how much you contributed screen. I want to purchase a IRA share certificate to reduce my tax not sure which box to enter. As above I enter$6500 in the 1st box 2018 (actually I contributed ($0)and it reduces my tax and the 2nd box entering the same amount which I would purchase in 2019 increases. If I leave blank 2019 it reduces my tax. How does this reduce tax entering that question of contributing 2019

[dmertz]

When you enter a nondeductible traditional IRA contribution into the first box, TurboTax assumes that this contribution was made in 2018 and it reduces the taxable amount of your 2018 IRA distributions, calculated on Form 8606.  When you subsequently enter the amount in the second box to indicate that the nondeductible contribution was made in 2019, TurboTax knows changes the entries on Form 8606 to show that the nondeductible contribution for 2018 made in 2019 cannot be used to reduce the taxable amount of 2018 IRA distributions, so your tax liability for 2018 calculated by TurboTax properly goes back up.

[greenjaggernut]

Then how can turbotax and other software's and consultants claim its not to late to contribute to an IRA to get s tax deduction for 2018?

[dmertz]

If your MAGI and workplace retirement-plan participation permit, the tax code allows a deduction on your 2018 tax return for a 2018 contribution made between January 1, 2019 and April 15, 2019.  The tax code does not allow the basis from a nondeductible contribution made between January 1, 2019 and April 15, 2019 to be applied to a distribution made in 2018.  This is the purpose of line 4 of Form 8606 and is the reason that TurboTax must ask for the amount contributed after year-end.

If your traditional IRA contributions are partially deductible and partially nondeductible, the box asking for the amount of your IRA contributions made after year-end is actually asking for the amount of your *nondeductible* contributions made after year-end.  It's this value that TurboTax uses to populate Form 8606 line 4.  If you enter a value larger than you nondeductible contributions, TurboTax will limit the line 4 amount to the amount of your nondeductible contributions for the year.

Any basis not applied on Form 8606 to reduce the taxable amount of your 2018 distributions will appear on Form 8606 line 14 to carry forward to be applied to traditional IRA distributions made in future years.