FEEDBACK: need support for distribution from inherited traditional IRA that had nondeductible contributions (Form 8086)

[love-the-irs]

I have the same issue. Turbotax will not generate an 8606 when taking an RMD from an inherited IRA with nondeductible contributions. I encourage Turbotax to address/resolve this issue. I will not use the software in the future if this can not be resolved; sending paper returns to the IRS is a lost cause.

[scooter123]

@DaveF1006  I am also in the situation where I took an RMD from an inherited IRA that has nondeductible contributions.  I'd really like to e-file.  Everything I read says I should not paper file.  I paper filed two years ago and the IRS didn't process my return until August.  The IRS is supposed to be even more backlogged now.

What do you think about the following "workaround"?  The 1099-R I got has a box 2a 'Taxable amount'.  It has the same amount as box.  What about if I just fill out the 8606 by hand like I'm supposed to, then just pretend the final result is what's in box 2a?  Then when TT asks if the distribution had nondeductible contributions, say no.

I've run through the screens in TT both ways, and the result is equivalent, i.e. I owe the same amount both ways.

Or how about a second option, which is just to enter a line under 'Miscellaneous income' that's the negative number of line 13 from form 8606 "nontaxable portion of all your distributions".  Then put in the note field a one-line version of 8606, such as:  "$200 Nontaxable portion of RMD. $2000 basis remains for next year".

The IRS should be ok with this, right?  I'm not trying to get away with anything, and I'd be doing them a favor by e-filing, instead of filing by paper.

[fanfare]

I said above that you have to file on paper but there is a way around it.

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Under these circumstances, TurboTax requires the user to calculate the taxable [amount] and enter enter [sic] the result in box 2a of TurboTax's 1099-R form instead of what is shown on the actual Form 1099-R. TurboTax uses this value to determine the amount on Form 1040 line 4b. (thanks to dmertz)

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E-file your return, don't file on paper.

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After it is ACCEPTED,
get Form 1040-X from IRS website and mail it in with your Form(s) 8606. which you can also get in fillable PDF.
Note: since you are not changing any dollar amounts on your tax return, you can leave all the lines 1-23 on 1040-X EMPTY.
The names on 8606 should be "<owner> and <your name> BENE" or Beneficiary if it fits, and your SSN

Part III Explanation: "didn't include 8606 with 1040".
In a few months to a year, you will get an acknowledgement from the IRS.

Note: you'll have to file 1040-X on paper, so this won't use up your one 1040-X e-File.

[scooter123]

@fanfare thanks for responding.  Regarding what you said:  

"Under these circumstances, TurboTax requires the user to calculate the taxable [amount] and enter enter [sic] the result in box 2a of TurboTax's 1099-R form instead of what is shown on the actual Form 1099-R."  

Where does it say that?  Are there instructions somewhere you can refer me to?  Thanks again.

[fanfare]

This is not advocated by TurboTax.

It is a workaround to get the proper amounts to appear on Form 1040.

[diyuser]

Thanks for describing your method of e-filing followed by a lighter paper superseding/amended return. Like many users, I want to e-file and for many years I had to paper file by printing large amount of forms and getting long processing times by the IRS. I don't understand why this requirement has been pending for at least 5 years and not addressed by Turbotax, as they already have the capability to generate a f8606 for the non inherited IRAs.

QUESTION: I read in the IRS FAQs about the f1040x (https://www.irs.gov/filing/amended-return-freque[product key removed]ions) that you need to resubmit all forms, but you said we could leave the 1040 blank. Do I misunderstand their statement?:

"What forms are required with an electronically filed Amended Return?

Both the electronic Form 1040 and 1040-SR Amended Returns (with attached Form 1040-X) will require submission of ALL necessary forms and schedules as if it were the Original 1040 or 1040-SR submission, even though some forms may have no adjustments."

[fanfare]

A) you are filing a paper 1040-X not electronically.

B) the 1040-X is not blank, only lines 1-23 are EMPTY, as no dollar amounts are changing.

see Instructions for Form 1040-X if you have doubts.

[scooter123]

I have decided to switch to Tax Act because of this.  They seem to support it better than TurboTax.  I e-filed with TaxAct yesterday.  So my 24 straight years as a TurboTax customer have come to an end.

[fanfare]

" They seem to support it better than TurboTax. "

TaxACT is essentially the same as TurboTax.

It won't support two "Taxpayer" IRAs with a basis.

The only useful advantage it has is that it lets you edit the Form 8606 Name line when you try to generate a paper copy of your second Form 8606.

That can be printed and attached to Form 1040-X, as described in the above solution.