Traditional IRA Cost Basis did not transfer to 2021 worksheets

[artg]

I utilize TT Premier in the Windows Desktop version.  For some reason our Traditional IRA Cost Basis did NOT carryover from our 2020 return to our 2021 return.  More specifically, our 2021 return does not contain the IRA Information Worksheet when I download our ".pdf file" including all calculations. 

We did not take any IRA distributions nor convert to a Roth IRA.  simply stated, our Traditional IRA Cost Basis information did not transfer from last year.

Can anyone provide any insight and/or guidance please?  

[MarilynG1]

TurboTax may not generate Form 8606 unless:

• Nondeductible contributions made to a traditional IRA
• Conversions from a traditional, SEP, or SIMPLE IRA to a Roth IRA
• Distributions from a Roth IRA (other than rollovers, recharacterizations, or a return of certain contributions)

Click this link for info on How to Trigger Form 8606. 

[artg]

@MarilynG1 

Good morning Marilyn.  Please read my question again.  This issue has nothing to do with Form 8606.  My wife and I have not invested in our IRAs since 2016.  We have not generated a Form 8606 in five years.

TT generates an IRA Information Worksheet (Keep for your records) and carries forward the cost basis.  This year (for Tax Year 2021) that worksheet is missing.

Please advise.

[DianeW777 · Accepted solution]

By generating Form 8606, your IRA Information Worksheet will become part of your tax return. Form 8606 is needed to keep the cost basis moving forward in your return even if the form is not necessary to send with your tax return.  

To trigger the 8606 in TurboTax

For the 4 situations listed at the top of this article (click the link), you can trigger Form 8606 with these instructions:

1. Open your return if it isn't already open.
2. Inside TurboTax, search for this exact phrase, including the comma: ira contribution information
3. Select the Jump to link in the search results.
4. Proceed through the IRA section, answering questions as you go.
5. When you reach the screen Any nondeductible contributions to your IRA? answer Yes, then continue. We'll generate and fill out the 8606 behind the scenes.
6. See the image below for assistance.

Tip: On joint returns, 8606-T stands for "taxpayer" (first person listed on the return) and 8606-S denotes "spouse." 

[artg]

@DianeW777 

Diane:

Thank you and that worked perfectly.  I will tell you this is the first year the IRA Cost Basis did NOT automatically transfer from the previous year but I can certainly live with this process.

Thank you.

[Wongtgc]

Same thing happens for 2022.  Even though I followed the instruction to type IRA Contribution Information in the search box and jump to the link and enter the amount of basis.  It will not carry over to do the math.  The software program ignored the basis I entered and treated my distribution as fully deductible.  Very disappointed that I bought a useless software.  I did Form 8606 for 2022 manually.  Nowhere can I override it on Form 1040 can I override it to show the correct taxable distribution amount. 

[DanaB27]

I cannot recreate your issue. To confirm, you followed the steps below and your traditional IRA contribution was fully deductible?

The question about the basis is about nondeductible contributions you made prior to 2022 (the basis in your traditional IRA before 2022 line 14 of your last filed Form 8606).

If you want to make a traditional IRA contribution for 2022 nondeductible then you have to select to make it nondeductible in the follow-up question (step 10):

1. Login to your TurboTax Account 
2. Click on "Search" on the top right and type “IRA contributions” 
3. Click on “Jump to IRA contributions"
4. Select “traditional IRA”
5. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
6. Enter the amount you contributed
7. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
8. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contribution before this tax year.
9. Enter your basis in the Traditional IRA from your 2021 Form 8606 line 14 (if you had a basis in the prior year)
10. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (if you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible).

Please be aware, if you had any pre-tax funds in your traditional/SEP/SIMPLE IRAs then the pro-rata rule applies. This means that with each distribution/ conversion, you will have a taxable and nontaxable part. 

@Wongtgc 

[Critter-3]

It is important to save a copy of the latest form 8606 with your IRA paperwork for future reference when you either make another non deductible IRA contribution or you take a distribution.  Don't count on any program to save this information for you.