FORM 8606 Basis

Forum|Forum|3 years ago
February 10, 2023
2 replies
9 views

I have a Traditional IRA account with no balance in it at all. If I make non-deductible contribution for year X in year X and immediately converting the full amount to my ROTH account during year X, leaving zero balance in the Traditional IRA account again, then when I file my Form 8606 every year during tax time, Line 2 (total basis in traditional IRAs) and Line 14 (total basis in traditional IRAs for year X and earlier years) should always be zero. Right?

Thank you.

GeorgeM777

Level 11

No, there is no need to file Form 8606 if you intend to use your traditional IRA to make a back-door Roth IRA contribution. Form 8606 is used to track basis in a traditional IRA. If you do not intend to have any basis in your traditional IRA, then there is no need to file Form 8606.

File Form 8606 only if you intend to keep a traditional IRA that contains contributions that were non-deductible. You can have both types of retirement accounts but your total contributions to all traditional IRA and Roth IRAs cannot be more than:

$6,000 ($7,000 if you're age 50 or older), or
If less, your taxable compensation for the year.

@Tauepsilon1920

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fanfare

Level 15

If there is no activity, do not file Form 8606, even when you do have a prior basis.

TurboTax will not attach it

IRS wants you to keep copies of all filed Forms 8606 for the life of your IRA.

MarilynG

Level 15

Yes, Form 8606 will be created because you enter a Non-Deductible Contribution when reporting the Back Door Roth Conversion.

Here's the steps for Entering a Back Door Roth.

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dmertz

Level 15

If you have other traditional IRA accounts with a nonzero balance, only part of your basis in nondeductible traditional IRA contributions will be applied to the Roth conversion, making it partially taxable, and the remainder of your basis will remain with your traditional IRAs. All of your traditional IRAs are aggregated on Form 8606 as if they are a single account.