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TT 8606

Forum|Forum|3 years ago
March 1, 2023
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Hello everyone! I have an issue with how TT online filled out Form 8606 for my spouse for 2021 tax year.

I made a non-deductible contribution to her Traditional IRA ($,6000) in 2022 for tax year 2021 (made before April 18, 2022). I converted the money in 2022 to her Roth IRA ("backdoor Roth"). While filing my taxes online for tax year 2022, TT online says I reported my spouse's IRA basis as $6,000 for 2021 (also appears this way in Form 8606 for my spouse in my 2021 return). The problem is I never got the option to input an IRA basis for 2021 for my spouse's accounts (I assume this was because I contributed said money in 2022, not 2021). I just tried to amend my 2021 return to see if I missed this. Again, the page never appears to enter the basis (it does appear for my accounts though: I made non-deductible contributions in tax year 2021 and converted to Roth in 2021).

Am I doing something wrong here? Do I need to amend my 2021 return to reflect the correct basis for my spouse's IRAs, even though the transactions all occurred in 2022? Or when TT online asks for an "explanation" when I change the basis, can I simply say "TT put this value in; I was never given the option to"?

Hopefully this wasn't confusing. Any help is appreciated!

TurboTax Premier Online

Best answer by DanaB27

No, the basis is not the value of the traditional IRA on December 31, 2021. The basis is only the nondeductible contributions she made that were in the traditional IRA. If she had nondeductible contributions before 2021 (had a basis) then you will enter it on your 2021 return during the IRA contribution interview (steps 8 and 9 in the instructions above). But she should have Form 8606 from prior years when she made the nondeductible contributions.

If she failed to file Form 8606 in prior years, she will need to file them. She might be able to file Form 8606 without amending the return. Please see Prior years Form 8606 and Instructions for details.

There can be a penalty of $50 for not filing Form 8606 on a timely basis, but the penalty can be waived if you can show reasonable cause for not filing. Please see this information for suggestions regarding reasonable cause.

Line 4 of your spouse's 2021 Form 8606 is correctly blank since she didn't take a traditional IRA distribution or make a Roth conversion in 2021. Line 4 of the 2021 Form 8606 will only have an entry if there was a distribution or conversion in 2021.

[Edited 3/15/2023 | 4:49 am PST]

@naviator2003

fanfare

Employee

" TT online says I reported my spouse's IRA basis as $6,000 for 2021 (also appears this way in Form 8606 for my spouse in my 2021 return). "

all sounds correct to me. why do you want to change anything?

N

naviator2003Author

@fanfare @DanaB27

Apologies, I should have included the following information:

My spouses total basis for IRA's was greater than zero on December 21, 2021 (all of which were deductible contributions), before I contributed the non-deductible contribution (much greater than $6,000). As such, I assume the basis that should have been reported in my 2021 return should have been the value of the accounts on December 21, 2021. However, TT online did not give me the option to input that value. Instead, it assumed my basis was only the $6,000 contributed in 2022.

D

DanaB27Answer

No, the basis is not the value of the traditional IRA on December 31, 2021. The basis is only the nondeductible contributions she made that were in the traditional IRA. If she had nondeductible contributions before 2021 (had a basis) then you will enter it on your 2021 return during the IRA contribution interview (steps 8 and 9 in the instructions above). But she should have Form 8606 from prior years when she made the nondeductible contributions.

If she failed to file Form 8606 in prior years, she will need to file them. She might be able to file Form 8606 without amending the return. Please see Prior years Form 8606 and Instructions for details.

There can be a penalty of $50 for not filing Form 8606 on a timely basis, but the penalty can be waived if you can show reasonable cause for not filing. Please see this information for suggestions regarding reasonable cause.

Line 4 of your spouse's 2021 Form 8606 is correctly blank since she didn't take a traditional IRA distribution or make a Roth conversion in 2021. Line 4 of the 2021 Form 8606 will only have an entry if there was a distribution or conversion in 2021.

[Edited 3/15/2023 | 4:49 am PST]

@naviator2003

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D

DanaB27

No, it doesn't seem you need to amend your 2021 tax return, it seems you reported your spouse's basis on her 2021 Form 8606 ($6,000).

If you entered your spouse's nondeductible traditional IRA contribution with the steps below on your 2021 tax return then you reported your spouse's basis on your 2021 tax return correctly. Since she didn't convert the money in 2021 she will have the basis on line 14 of her 2021 Form 8606 to carry to 2022.

Login to your TurboTax Account
Click on "Search" on the top right and type “IRA contributions”
Click on “Jump to IRA contributions"
Select “traditional IRA” for your spouse
Answer “No” to “Is This a Repayment of a Retirement Distribution?”
Enter the amount your spouse contributed for 2021
Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
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.
Enter your basis in the Traditional IRA from your 2020 Form 8606 line 14 (if you had a basis in the prior year)
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).

To enter her conversion on your 2022 tax return:

Click on "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”
Click "Continue" and enter the information from your spouse's 1099-R (make sure you select that it is her Form 1099-R)
Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
On the "Review your 1099-R info" screen click "Continue"
Answer "yes" to "Any nondeductible Contributions to your IRA?" since your spouse had any nondeductible contributions in prior years.
Answer the questions about your spouse's basis from line 14 of your spouse's 2021 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs