I had uncovered an unexpected retirement account that I transferred to my current Financial Accts. It has an unknown cost basis that we're trying to get resolved. If the cost basis to the acct stays unknown, what are the tax implications?
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Hi, Sepnieski,
Congratulations on the found money!
While you are permitted to use estimates in filing taxes, the IRS can always challenge those estimates if you are audited. In a traditional IRA, the IRS may take the position that all funds contributed to the account were pre-tax, and, therefore, all distributions are taxable.
That said, for a traditional IRA cost basis is usually $0. Cost basis for a ROTH IRA is typically only relevant if you haven't met the qualifications for tax free treatment.
Still, there are times that basis matters in a retirement account. If after-tax funds were contributed, it's important to determine that amount so that you don't end up paying taxes unnecessarily. This article from Kiplingers may give you some good ideas of where to start to hunt down that information. Of course, the Kiplingers article is added here only to give you a springboard for ideas. TurboTax does not vet information from other companies and you should feel free to return to this forum if you have additional questions.
Hope this helps.
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Best,
Karen
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