Turbotax bug - Traditional IRA Cost Basis reporting with no contribution in current year not allowing me to generate 8606 for this purpose

[pete007]

I have no current year IRA Contribution, but I have a Traditional IRA Cost Basis which I reported in TurboTax from prior years.  For decades, I have reported these prior year contributions and included Form 8606 with my prior tax filings to track this Cost Basis (pre-TurboTax).  TurboTax shows me this information in the worksheet when I go to the Print Center, but refuses to add a 8606 for me to report & track my prior IRA cost basis without a contribution for this year, which should not be a required for this form to be included. 

I attempted to resolve this with phone support, but they seem unable to figure out how to help me resolve this bug.

[dmertz · Accepted solution]

TurboTax is behaving correctly.  Per the IRS instructions for Form 8606, Form 8606 is only to be included in your tax return if you have made a nondeductible traditional IRA contribution for the year or during the year you have made a regular traditional IRA distribution involving basis in nondeductible traditional IRA contributions, you have done a Roth conversion, or you made a nonqualified distribution from a Roth IRA.

Having done none of these transactions, no From 8606 is to be present in your tax return.  Your last-filed Form 8606 is still current in its reporting of your basis in nondeductible traditional IRA contributions that carries forward.

[pete007]

Thanks, glad to hear that one of my issues which I thought was a problem is apparently a non-issue (not sure why my prior accountant inserted this 8606 annually solely to re-report my cost basis). Now I just need to get some resolution on my other issue so I can make sure I am filing my taxes accurately before I push the button to file.

[dmertz]

Also note that the IRS instructions say to retain copies of all Forms 8606 that you have ever filed.

[pete007]

This is kind of funny / over burdensome, because I don't have my paper tax returns from 30+ years ago when I made those contributions and most certainly won't have those in another 20+ years when I retire.

[abcdef1231]

Hello dmertz, 

I am using turbotax online version for tax year 2024.  TT asked my husband's nondeductible ira contribution cost basis, then asked how much I contributed, instead of asking my total basis, it says, "Income Too High To Deduct an IRA Contribution"... when comes to 8606, my husband has the correct basis from previous years, I have 0 on line 2 "total basis in traditional IRAs", how to fix it?  I have spent many hours trying to fix it, but no luck, any ideas?

[DanaB27]

Please see Why am I unable to report my 2023 for 8606 basis? if you do not get the question "Any nondeductible Contributions to your IRA?" in the IRA contribution interview or retirement interview.

@abcdef1231 

[applebanana101]

This bug is preventing me from filing.  When will the bug be fixed?

Without a fix, I can't file using TurboTax.  Thanks!

[abcdef1231]

Any idea the bug will be fixed?  I am having trouble with online 2024 version.  Thanks

[DanaB27]

We are working on resolving the issue. Please sign up to receive updates here.

@applebanana101 

@applebanana101 

[KarenSue1]

I contributed to  non deductible IRA's in 1992-1997 and TT generated an 8606 each year and tracked my traditional IRA basis. 

Then I contributed to  ROTH IRA's for several years and TT did NOT generate an 8606...ok no problem... I understand it's not supposed to.

In 2009 I did a ROTH conversion and TT generated an 8606  which INCLUDED my traditional IRA basis. No issue TT did what it was supposed to.

However,  since 2009,  I have done additional Roth conversions and an 8606 reported the conversion  but  failed to  report my traditional IRA basis.   I looked up the TT IRA worksheet and  no traditional IRA basis is being carried over from year to year.  What do I need to do to correct this and will I have a problem with the IRS if my last several 8606 forms (since 2009) did not report my IRA basis?  

[dmertz]

The Roth conversions after 2009 included a pro rata share of basis even though it was not reported properly on your tax return.  Failure to report it properly on Form 8606 does preserve that portion of your basis for future use.  You'll need to reconstruct the the previously filed Forms 8606 to correct the calculations to determine the amount of basis that carried forward each year.  For 2021, 2022 and 2023 Forms 8606, you can file an amended tax return and claim a refund, but you have to do the one for 2021 by April 15, 2025 before 2021 becomes a closed tax year.  You'll need to include an explanation with the first of these amendments that you file since this will need to appear as an adjustment to your basis.  It seems unlikely that the IRS will ask for the intervening corrected Forms 8606 because they are not reporting any additions to your basis, but they still might ask for them.  (If you had no reason to file Forms 8606 in 2021 through 2023, you would make the adjustment on your 2024 tax return and provide explanation.)  An adjustment is made in TurboTax by clicking the EasyGuide button that TurboTax presents after you indicate that you made nondeductible contributions.

[KarenSue1]

Thank you so much for this incredible response.  I am looking at this again.  My 2009 return is the outlier. I think I may have done that year wrong and the other years are correct. Here is why....

I am wondering if my basis should NOT have been reported on the 8606 that year.

In 2009 I contributed to a Roth and I did a Roth Conversion.

I did NOT contribute to a non deductible Traditional IRA  in 2009.

Therefore I do NOT think I should have completed Part 1 and reported the basis. 

Unless  I'm reading the Part 1 instructions  wrong I don't think any of the 3 bullets  applied because I did not contribute to non deductible traditional IRA that year.  So should I have just filled out Part 2 reporting only the Roth conversion???  Thank you again for helping me.

[MarilynG1]

Yes, it sounds like your Form 8606 was incorrect for 2009.  As @dmertz stated, you can amend recent returns and send corrected 8606's for years too old to amend, just for years it was needed.  Most important is to get correct basis into your 2024 return

Here's more info on Form 8606 and How to Trigger Form 8606.

@KarenSue1 

[KarenSue1]

Thank you so much I am starting to connect the dots ..LOL 

So here is what I am unclear of.  After 2009,  I started contributing to a Roth IRA yearly and unless I made another mistake TT does not report Roth IRA contributions on the 8606 or any other form that I know of.

TT only generated an 8606 when I did a ROTH conversion and because you don't have to fill out Part 1 when you do a conversion the basis is not documented.   

When will this basis appear again? I don't see it in my TT tax worksheet.  So I have a basis last reported in 2009 (probably incorrectly ☹️ and correctly in 2005 prior to that).   When do I use this basis that documented my non deductible contributions... when I start taking RMD's?  Should it be somewhere in my TT to carryover for future use? Thank you so much!