Didn't claim non-deductible IRA disrttibution

[tigger57]

I made a few non-deductible IRA contributions in the '90s, and submitted Forms 8606.  These were never saved nor carried forward in any tax software.

Starting in 2017, I started taking IRA Distributions and doing Roth Conversions almost every year since.  I just realized I should have been getting a (small) part of those tax-free.

What to do?

I think I can amend only the past 3 years, so can't go back and correct all this (but I could do 3 years).

What I want to do is just start claiming the tax-free part now.  But I'm worried is there any chance I could have to forfeit the tax-free parts I could have already taken? I've only cheated myself by delaying this.
Thanks for any advice.

[MaryK4]

Yes, you could go back and amend the last three years, but you could also just add the basis to this year's tax return and use the basis going forward.  Because you did not include the basis, you overpaid the taxes so you cannot be held liable for underpaying the taxes.  Moving forward the pro rata taxable amount will still be correct.  I do not see a "use it or lose it" provision that would apply (as I said, the government was not shorted) but if I find anything, I will add to the post and tag you.  

[tigger57]

Thanks for your reply! I'm okay with just starting this year - it was my fault and my loss, but I would like to start recouping it.
My concern is with the mechanics of "just add the basis to this year's" return. I last claimed a basis on Form 8606 in 1997. Since 2017 I've submitted four Forms 8606, only to provide Part II, Conversions, information with equal Amount Converted and Taxable amounts, mentioning nothing of a basis. I should have shown (and used) my basis on Line 2 each of those years.
I guess my question boils down to... By submitting several Forms 8606 in recent years with nothing on Line 2 (basis), can I now just start using the basis last reported 27 years ago?  It just seems that might raise a red flag.
Thank you.

[dmertz]

"you could also just add the basis to this year's tax return and use the basis going forward."

That doesn't work.  The tax code does not permit picking and choosing which years to apply the basis.

Failure to file Form 8606 showing the application of the basis does not mean that the distributions did not include a proportional amount of basis, it just means that an erroneous tax return was filed.  To determine the amount of basis currently remaining in the traditional IRAs, one must prepare all of the missing intervening Forms 8606 even though the tax returns for years prior to 2021 cannot be amended to claim a refund due to being closed tax years.

[tigger57]

Thank you for replying! I was afraid of that, not just for the lost dollars but for needing to construct 7 years of Form 8606 to go forward.
But I'm still unclear of the mechanics of doing that. If I prepare missing and incomplete Forms 8606 for 7 years (2017-2923), and figure the "correct" reduced basis for each year, then what? Whether I amend from 2021 forward, or start with 2024, how do I re-introduce a basis after showing no basis several of those intervening years (after showing basis in 1997)?
Thanks for any further advice.

[dmertz]

Your choices would probably be either file all of the earlier missing forms to correct the basis for each year but without amending to claim a refund, or don't file those but with your 2021 amendment include an explanation as to how you derived the basis that you are reporting with the amendment.  You could possibly do the latter and if the IRS asks for the missing forms you would already have them to provide.