Form 8606 - A few questions

[richardR1]

We have been collecting and saving our 8606s for multiple years.

The only time i have seen some benefits is hen doing Roth conversions, TurboTax calculates an amount not taxable, and reduces the total basis by that amount.

How else do those numbers help? I asked my advisor that when RMDs are due, does the basis help and he said no.

So where else do I have benefit of the taxable basis dollars for my wife and I as we have separate amounts

Is there  YouTube or podcast anyone can recommend?

Thanks

[MaryK4]

If you make nondeductible contributions to your traditional IRA, you must file an 8606 for that year.  If you do not, the IRS will treat your entire contribution as if it was deductible even if you did not deduct it so when you withdraw the money it will all be taxable income (no basis).  See Form 8606 and What is IRS Form 8606: Nondeductible IRAs - TurboTax - Intuit.

I did not see any podcasts on the 8606 specifically; but if find any helpful podcasts, I will add to this post.

[baldietax]

Re "How else do those numbers help? I asked my advisor that when RMDs are due, does the basis help and he said no."...

Having a basis in the IRA should reduce how much of the RMD is taxed, the same way it does for Roth conversions.  Your non-deductible contributions i.e. "basis" in the IRA is "after tax" money you were able to contribute to the IRA to defer taxes on earnings from those contributions.  This "basis" portion of the IRA is not taxable when its withdrawn, and this applies to any distribution just as it does in Roth case.  Form 8606 will calculate what portion of any distribution and/or rollover is taxable and what is not, and reduce your basis accordingly.

IRS Pub 590 may be helpful read, see section "Distributions Fully or Partly Taxable".

https://www.irs.gov/pub/irs-pdf/p590b.pdf

Not a CPA/expert but just my 2 cents, hope this helps - suggest a further conversation with your advisor on this topic.

[dmertz]

Your basis in nondeductible contributions is not a factor in determining the size of your RMDs.  It is a factor in determining the taxable amount of your RMDs (unless your entire RMD goes to making QCDs), calculated on Part I of Form 8606.

[Opus 17]

If you want to prove, when you retire, that part of your IRA withdrawal is non-taxable because you made non-deductible contributions, then you need your form 8606s.  Without them, your entire IRA withdrawal is taxable, even though you already paid tax on some of the contributions, because the IRS does not keep track for you.  

Likewise, if you want to do a Roth IRA conversion, you need the form 8606 to prove that part of the conversion is non-taxable.  Without them, you will pay tax on the entire converted amount, even though you already paid tax on some of the contributions, because the IRS does not keep track for you.