Old Ira deduction question

[uocan]

I noticed that for at least 5-6 years during my childhood my father made Ira contributions for me. I had earned income for a couple of thousand dollars at the time. He then filed taxes on behalf of me, took the Ira deduction as well as the standard deduction resulting on a negative taxable income… of course he could have probably done non deductible contributions and still ended up with a zero tax bill but this is not what happened. Well I’m now 40 and I just noticed it. Over the years the contributions associated with this mistake grew to be quite sizable, so it makes a nontrivial difference whether the contributions are deductible or not. Is there anyway to remedy this situation? I’m not sure if amending old taxes is an option given that amendments seem to be allowed only for the last 3 years, and the issue here dates back to 90s. Any advice on this unusual situation?

[MindyB]

No, you are not able to amend the tax returns to elect to make these contributions non-deductible, because the time limit for filing an amended 1040 (1040-X) has passed.  Per the IRS, "Generally, after you file your return, you can change a nondeductible contribution to a traditional IRA to a deductible contribution or vice versa if you make the change within the time limit for filing Form 1040-X." The time limit is 3 years after the date you filed your original return or within 2 years after the date you paid the tax, whichever is later.

It is possible to initiate a Roth conversion, where you would pay tax now on both the contributions and earnings, and then the future earnings would be tax free. To read more about Roth conversions, see: Converting IRA to Roth IRA

@uocan [Edited 01/21/24 2:12 PM PST]

 

[dmertz]

The question is not about changing the contributions to Roth.  The question is whether they can be changed to nondeductible traditional  IRA contributions.  If the deduction was actually present on the original tax returns, it's unlikely that they could now be changed after 30 years.  Such filings would not have been erroneous, just not beneficial.  If the deduction had not been present as an adjustment to income on Form 1040, you might be able to file the late Forms 8606 if you can show reasonable cause, but there would likely be a $50 late-filing penalty for each.