FORM 8606 Basis

[Tauepsilon1920]

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]

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:

1. $6,000 ($7,000 if you're age 50 or older), or
2. If less, your taxable compensation for the year.

@Tauepsilon1920

[fanfare]

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.

[Tauepsilon1920]

I would have to file form 8606 for the backdoor conversion, right?

[MarilynG1]

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. 

[dmertz]

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.

[sandeeptt]

Thank you for this comment. I have a problem that you may have an idea about.

I made non-deductible contributions to the Trad IRA in 2021 and prior and therefore have a basis. I did not, however, make any 2022 contribution.

I do provide this info in TT but it does not seem to generate the form 8606 (looking at the PDFs for review). What am I missing?

Thanks.

[DanaB27]

If you didn't make a nondeductible contribution, or conversion, or took a distribution from your traditional IRA then you do not need to file Form 8606.

Please be aware you only need to file Form 8606 if the following applies:

• You made nondeductible contributions to a traditional IRA for 2022, including a repayment of a qualified disaster or reservist distribution.
• You received distributions from a traditional, SEP, or SIMPLE IRA in 2022 and your basis in these IRAs is more than zero. For this purpose, a distribution doesn’t include a distribution that is rolled over (other than a repayment of a qualified disaster distribution (see 2022 Form 8915-F)), qualified charitable distribution, one-time distribution to fund an HSA, conversion, recharacterization, or return of certain contributions.
• You or your spouse transferred all or part of their traditional, SEP, or SIMPLE IRA in 2022 to the other spouse under a divorce or separation agreement where the transfer resulted in a change in the basis of the IRA of either spouse.
• You converted an amount from a traditional, SEP, or SIMPLE IRA to a Roth IRA in 2022.
• You received distributions from a Roth IRA in 2022 (other than a rollover, recharacterization, or return of certain contributions).
• You received a distribution from an inherited traditional, SEP, or SIMPLE IRA that has a basis, or you received a distribution from an inherited Roth IRA that wasn’t a qualified distribution. You may need to file more than one Form 8606. See IRA with basis under What if You Inherit an IRA? in Pub. 590-B for more information. (IRS Form 8606 Instructions)

@sandeeptt 

[Opus 17]

---

@sandeeptt wrote:

Thank you for this comment. I have a problem that you may have an idea about.

I made non-deductible contributions to the Trad IRA in 2021 and prior and therefore have a basis. I did not, however, make any 2022 contribution.

I do provide this info in TT but it does not seem to generate the form 8606 (looking at the PDFs for review). What am I missing?

Thanks.

---

If you made no new non-deductible contributions in 2022, and you did not take any withdrawals or make any conversions, then you will not have a form 8606 for 2022, even if you have a basis from before.

However, this highlights the need to save your prior form 8606s from past years, because you will need them whenever you add non-deductible funds, or convert or withdraw your IRA.  Form 8606 is an important exception to the general rule that you only need to save tax papers for 3 or 7 years. 

[sandeeptt]

Thanks for your reply again.

I understand that I need not file the form 8606. But I would like to. This will make it easier for me to track the basis over the years. In fact, an earlier comment in this thread by the Turbotax expert also suggests filing the form as well.

Is it possible to force the form 8606 filing in Turbotax?

[Opus 17]

---

@sandeeptt wrote:

Thanks for your reply again.

I understand that I need not file the form 8606. But I would like to. This will make it easier for me to track the basis over the years. In fact, an earlier comment in this thread by the Turbotax expert also suggests filing the form as well.

Is it possible to force the form 8606 filing in Turbotax?

---

Right on the front of the form it says "Complete this form only if..."

https://www.irs.gov/pub/irs-pdf/f8606.pdf

Instructions are here

https://www.irs.gov/instructions/i8606

You need to keep your prior forms, that's what you will need in the future.

[dmertz]

There is no way to force TurboTax to file an unnecessary Form 8606.