How do I report the basis of an inherited IRA from my late spouse on Form 8606? No distributions have been taken. Do I simply combine our basis' together and report on one Form 8606 under my SSN? Thanks
If maintained as a inherited IRA rather than you, as spouse, taking the IRA as your own, the basis in the inherited IRA remains independent of your own and is not to be included on your own Form 8606. Instead, you would need to create a separate Form 8606 outside of TurboTax to calculate the taxable amount when taking distributions from the inherited IRA, then entering in place of the amount shown in box 2a on the original code-4 Form 1099-R the calculated taxable amount. You would then include the separately prepared Form 8606 (which you need to mark as being for the inherited IRA) with your mailed paper tax return.
If you have taken the IRA as your own, either by treating it as your own, transferring it to your own IRA or rolling it over to your own IRA, then the basis from the inherited IRA transfers to you. When the basis transfers to you, in TurboTax you must enter the amount as an adjustment to your own basis by clicking the EasyGuide button after indicating that you made nondeductible traditional IRA contributions and entering the amount as an amount of basis transferred from your deceased spouse.
I would like a clarification. My spouse died in 2023 after taking her RMD and I then rolled her IRA into mine also in 2023. For tax year 2023, do I put her 2023 end of year basis as a non-deductible contribution to my IRA, or do I do this for 2024 taxes?
You should receive a 1099-R from the financial institution managing your IRA showing a distribution of the complete amount of your rollover in box 1 and a zero in box 2. It should have code G in box 7. That is how they should report the rollover to you and how you should report it on your tax return.