How to file 2020 tax with amendment to 2019 and 2018? (IRA basis error)

[bbest2014]

I'm about to file my 2020 tax, and I realized that I made a mistake in 2018 and 2019 tax return regarding my backdoor Roth. Basically for both years, I didn't report the non-deductible traditional IRA contribution, therefore got the basis wrong and paid tax twice.

Now I have a few questions on how to best move forward.

1. I know my 2019 basis number is wrong on my 2019 tax return, but do I have to fill in the wrong number (as shown on my current 2019 return) in my 2020 return, then amend my 2019 return, and then amend my 2020 return? Or should I put in the correct value on my 2020 return, while filing my 2019 amendment at the same time?

2. I need to file amendment to 2018 return (I contributed to traditional IRA before 4/15/2019 for 2018 quota, but didn't report it on the tax return, because I didn't know I needed to); then I need to amend my 2019 return based on the amended 2018 return. Do I need to wait for the outcome of 2018 amendment before filing 2019 amendment, or I can file two amendments at the same time? 2018 amendment needs to be done on paper, while 2019 one can be done through Turbotax digitally, not sure if it matters though.

Thank you for your help!

[DavidD66]

You don't nee to file an amendment to report a contribution to a traditional IRA, unless it was a tax deductible contribution.  In that case you would nee to file an amended return.  Form 8606 can be filed by itself:  Form 8606

After filing the Form 8606 for 2018, you can file an amended return for 2019.  How do I amend my 2019 return?

[bbest2014]

Hi David,

Thanks for the explanation. Here's my situation: I've contributed to traditional IRA in 2018 with non-deductible contribution. I thought I need to file a form 8606 for it (which I didn't and I'm thinking of amending), because I need to have this number as the "2018 basis", so that when I do my 2019 backdoor Roth, my $6000 distribution from my traditional IRA would match with my $6000 from the 2018 basis, hence will not be taxed again. Right now, the non-deductible contribution of $6000 is not in the IRS system, so when I convert it (distribute it from traditional IRA) to Roth IRA, IRS would tax my on the distribution.

Do you mean I can file a form 8606 to IRS standalone, without amending my 2018 tax? Or filing an additional form is already an act of amending a tax return, although it does not affect the tax amount of that year?

For my 2019 tax, I will have an amendment that affects my tax amount, as I explained above. Do I need to wait for the outcome of 2018 amendment (or acknowledgement of receipt of form 8606), before I file the 2019 amendment?

Thank you very much!

[bbest2014]

Hi, could some one take a look at my follow up questions and shed some light? thanks!

[DanaB27]

Yes, you can file Form 8606 alone if it doesn't change your original tax return: Form 8606 for 2018

Sign Form 8606 and send it to the IRS the same place you would otherwise file Form 1040, 1040-SR, or 1040-NR. Be sure to include your address on page 1 of the form and your signature and the date on page 2 of the form. Please see Where to File Paper Tax Returns With or Without a Payment

You can amend your 2019 tax return as soon as you filed the 2018 Form 8606.

[bbest2014]

Thank you, Dana! You helped me sort our my 2018 and 2019 tax situation.

Just one more question...I have the exact same problem for 2020, my 2019 basis is wrong, which I'm going to file amendment. Now I'm about to file my 2020 tax, should I use the wrong basis on the existing 2019 tax return? Or can I use the correct basis for my 2020 return, while filing for my 2019 amendment? (let's say I file my 2019 amendment today, and file 2020 tax return a few days later)? I'm trying to avoid the need to file another 2020 amendment down the road, when I already know there is a mistake in it. Thank you very much!

[DanaB27]

You will use the corrected basis on your 2020 tax return.