Years ago forgot to claim IRA contribution deduction. Never filed Form 8606. This tax year, took a lump sum distribution. Will TurboTax include 8606 and IRS $50 penalty?

[Phillip1 · Accepted solution]

TurboTax can handle the Form 8606 for the distribution.

File the missing Forms 8606 (you can file them separate from a 1040 tax return) by mail to establish your nondeductible IRA. The IRS will bill you for the penalty, and I would recommend responding (the return address on the bill) with a letter to request that they waive the penalty for reasonable cause (something as simple as you forgot about it).

Report the lump-sum distributions on this tax return as though the Form 8606 had already been filed (it may be worth extending till later in the year to make sure the IRS processes the late Form 8606 filings).

[gawman57]

Prompt, clear, and complete answer. Thank you.