Tax on traditional IRA distributions

[kccqcvt]

I have a traditional IRA account and have contributed to this account off-and-on for the past twenty or so years. In some years, the contributions were tax deductible, while some other year they were not [due to income restrictions].

My understanding [this could very well be wrong] is that when I took distributions from non-deductible IRA, I'll have to pay taxes only on the gains and not on the contributions which were already taxed.

Does that mean that I have to keep tracks myself how much was from non-deductible bucket and how much was from deductible bucket?

That's a lot of digging into twent years or so history!

[AmyC]

You were supposed to be filing form 8606 every year to keep up with it. You will need to go back and recreate those records and send them to the IRS. You need to:

1. print each year form 8606, IRS prior year 8606 forms and instructions
2. fill it in with the correct numbers
3. sign and date the bottom of the form
4. mail each year separately.  See Where to file paper tax returns with or without a payment

I personally helped someone go back over 30 years because the IRS required them to do it. The other option would be to say there is no basis, if you never filed an 8606.

[kccqcvt]

Thank you, Amy.

I've gone back a several years and found Form 8606 that TurboTax created for me in some of the years.

Can I assume that Turbotax included this form in the return package if I filed electronically?

[DawnC]

If the form was included in your tax file, it was e-filed with your return.   We'll automatically generate and fill out Form 8606 (Nondeductible IRAs) if you reported any of these on your tax return:

• Nondeductible contributions made to a traditional IRA
• Distributions from a traditional, SEP, or SIMPLE IRA that had nondeductible contributions (not including rollovers, conversions, recharacterizations, qualified charitable distributions, one-time distribution to fund an HSA, or return of certain contributions)
• Conversions from a traditional, SEP, or SIMPLE IRA to a Roth IRA
• Distributions from a Roth IRA (other than rollovers, recharacterizations, or a return of certain contributions)

However, you'll have to download and print Form 8606, manually fill it out (instructions), and print and file your return, if any of these three situations apply to you:

1. You received a distribution from an inherited traditional IRA that had nondeductible contributions.
2. You transferred an inherited plan account to a Roth IRA.
3. You received a distribution from an inherited Roth IRA that was not a qualified distribution.

How do I find Form 8606?