topic IRA Basis??? in Deductions & credits

IRA Basis???

roscoedillon — Mon, 13 Mar 2023 02:27:03 GMT

IRS help is, well, not helpful. 8606 asks for my basis with no guidance.

If I converted 100% off my Trad IRA to a Roth in the tax year in question (i.e. ending the year with a Trad IRA balance of $0), but the previous years IRA basis was non zero, does my Basis go back to zero or does the previous value carry through even though it was completely converted?

Specifically, my 2010 8606 Trad basis is $21333 but I converted more than that (earnings) at the end of the year. What would my starting basis be for 2011?

My Googling has told me that the IRA Basis is the amount of IRA Contributions that have already been taxed (I could not deduct my IRAs due to my income). Common sense would tell me once that has been converted to a Roth then and the account balance zeroed out the Basis would go away as well. However Turbotax inserted 2083 in line 2 as the total Trad IRA Basis. For the life of me I can't figure out where that number came from.

(I'm trying to reconstruct my current IRA Basis for this years taxes after many of my previous records were lost)

Re: IRA Basis???

fanfare — Mon, 13 Mar 2023 03:09:09 GMT

if you completely convert an IRA to zero balance, in some circumstances you can retain a basis for future use.

If TurboTax has been carrying your basis for you, it should be correct.

Sometimes TurboTax will lose your basis if you answer the questions the wrong way.

@roscoedillon

Re: IRA Basis???

roscoedillon — Mon, 13 Mar 2023 05:26:20 GMT

The's the problem, TT was not. I agree, it was probably user error. I discovered that if you jump around sections one can miss important question ("Did you convert any of that distribution?"). But in one case an IRA form showed a conversion and on another form it did not. All I know is after several long nights of digging through partially complete records, I finally got my answer...zero. Of Course TT bitched that it did. not match last years and that I need to provide an explanation (It did. not account for the conversion that emptied the account and would have zeroed the basis. My answer, it had been calculated incorrectly over the last several years

Re: IRA Basis???

fanfare — Mon, 13 Mar 2023 20:19:52 GMT

You explanation should be

"tax software requires this statement because it is not consistent with my records".

I'm not sure where that explanation goes, it may be an attachment at the end of your return.

@roscoedillon

Re: IRA Basis???

roscoedillon — Mon, 13 Mar 2023 23:46:46 GMT

Noted 🙂

TT asked me the question when my calculated basis did not match what 2021 records had...