8606 Not Generating for Nondeductible IRA Contributions for 2024

[Hokiemommo]

Entered a 1099-R for distribution from a traditional IRA.  I have Nondeductible IRA contributions and complete a Form 8606 every year to keep track of the basis.  This year (2024), the software does not generate a Form 8606 to calculate the taxable portion of the distribution and track the basis.  The software populated the IRA distribution to Line 5a (Pensions & annuities) on Form 1040.  The distribution should have populated to Line 4a (IRA distributions) on Form 1040.  The amounts in Lines 4a and 5a cannot be overriden.

I have contacted Intuit customer service to report the software problem.  I wonder if anyone else has encountered this problem this year.  Every other year the 8606 generated no problem and the IRA distribution was populated to Line 4a on the Form 1040.

[DanaB27]

Can you verify that your Form 1099-R entry has the IRA/SEP/SIMPLE box checked? If you imported/uploaded the Form then you might need to delete it and enter it manually.

I assume you also didn't get the "Any nondeductible Contributions to your IRA?" screen after you entered all Form 1099-R and clicked "Continue"?

1. Click on "Search" on the top right and type “1099-R”  
2. Click on “Jump to 1099-R”
3. Click "Continue" and enter the information from your 1099-R
4. On the "Review your 1099-R info" screen click "Continue"
5. Answer "Yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
6. Answer the questions about the basis from line 14 of your 2023 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

[Hokiemommo]

Thank you for your response.  I did enter the 1099-R manually and the IRA/SEP/SIMPLE box is checked.  When answering questions about having nondeductible IRA contributions, I also checked yes.  Then a drop down box appeared stating:

If [name] kept records of nondeductible contributions, you can determine how much of the $xx,xxx distribution is taxable.  Show Me How to Do This. **

Once you know how much is taxable, enter the amount below.

      Calculated Taxable Amount  [box to enter amount]

** The Show Me How to Do This is a link to Tax Help that states a 8606 is needed to calculate the taxable portion of the distribution.  [Normally the software automatically starts a Form 8606 at this point]

If I leave the "Calculated Taxable Amount box blank, it removes it from the 1099-R box 2a (which then shows an error on that 1099)  [the software should not be asking me to calculate the taxable amount manually]

I have attached a screenshot of the page in TurboTax regarding Nondeductible IRA Calculations.

I have been doing taxes on TurboTax for years with Traditional IRAs having nondeductible IRA contributions and I have never encountered this.  It seems to be a software glitch.  I appreciate any assistance you can provide.  

Thank you!

[dmertz]

The response by TurboTax suggests that you have indicated that this is a distribution from an inherited IRA.  A distribution from an inherited IRA would have code 4 in box 7 with the IRA/SEP/SIMPLE box marked.

Distributions from an inherited IRA do not go on your Form 8606.  The calculation must be done on a separate Form 8606 outside of TurboTax.  TurboTax does not support generating Forms 8606 for distributions from inherited IRAs.

If the distribution is not from an inherited IRA and the Form 1099-R has code 1, 2 or 7 in box 7 with the IRA/SEP/SIMPLE box marked, I suggest deleting the Form 1099-R from TurboTax and reentering it, making sure to not indicate that the distribution is from an inherited IRA.

[Hokiemommo]

Thank you for your response.  Although it is a bit confusing.  You say, "Distributions from an inherited IRA do not go on your Form 8606."  Where do they go?  Then you say, "The calculation must be done on a separate Form 8606 outside of TurboTax."  If I manually complete a Form 8606 in Turbo Tax and enter the Calculated Taxable Amount in the box, will it populate to all other supporting worksheets & forms?

Also, Turbo Tax last year (2023) did support inherited IRA distributions with nondeductible contributions.  Why is this year different?

I buy Turbo Tax software to do the work for me.  Thanks

[dmertz]

TurboTax can only generate Forms 8606 for distributions from traditional IRAs owned by Taxpayer and Spouse as participants.  TurboTax does not have the ability to generate the separate Form 8606 necessary for the calculation of the taxable amount where Taxpayer or Spouse is the beneficiary of an inherited IRA.  Inherited IRAs maintained for the benefit of an individual who is the beneficiary cannot be aggregated with that individual's own IRAs, so any taxable amount must be determined on a separate Form 8606 that you must prepare outside of TurboTax and then inform TurboTax of the result.

TurboTax has never supported Forms 8606 for inherited IRAs.  If you have your own traditional IRAs, it seems likely that you filed in incorrect tax return for 2023 by treating the inherited IRA as your own.  (If you inherited an IRA from your spouse and have chosen to treat it as your own, it's no longer an inherited IRA and would not have distributions reported with code 4 in box 7 of the Form 1099-R.)

[Hokiemommo]

Thank you for your response.  I understand what you are saying.  I am hoping once I calculate the taxable amount outside Turbo Tax and I plug that amount into the software and I will still be able to file electronically this year.

Based on your assistance, it looks like I will have to amend the 2023 taxes.

Thanks for your patience and helping me work through this complicated issue.