Form 8606 Inherited IRA

Forum|Forum|2 years ago
February 10, 2024
2 replies
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Hi,

My mother passed away in 2023 and I inherited her IRA which had a basis. While going through the TurboTax questions, it asks for the IRA value on 12-31-23. This IRA was transferred to me before the end of the year so the value in her account is zero, but it has a positive value in my account.

a. If I enter zero, it applies all of the remaining basis to her 2023 tax return.

b. If I enter the value in my account at the end of the year, it only applies a small amount to her tax return.

I was of the impression that the basis carried over to my inherited IRA. It is not clear how to answer the 8606 questions.

There are also 2 other fields called Outstanding Rollovers and Outstanding Recharacterizarions. Do these somehow apply in this case?

She had taken her RMD prior to her passing.

Thanks for your help

Best answer by dmertz

TurboTax is asking for the year-end value in your own IRAs, not the inherited IRA. The year-end value in the inherited IRA is to be entered nowhere in TurboTax. The taxable amount of the distribution fro the inherited IRA must be done on a separate Form 8606 outside of TurboTax and only the the resulting taxable amount provided to TurboTax. TurboTax can only handle your own Form 8606, not a Form 8606 for an inherited IRA.

You should include the separately prepared Form 8606 with your printed and mailed tax return.

DianeW777

If you have withdrawn the full amount of the IRA, be you will use Form 8606 to show the basis on your return as of the date of death. If your mother did take any withdrawals during 2023, before death, she would use her basis from your 2022 tax return (8606, Line 14) on her final return.

You would then use any remaining basis on your return as the tax free amount and the difference being fully taxable.

You would use the value for her on the date of death, and for your return you would enter the value as of December 31st. These numbers should make both returns accurate. If you are not sure or you don't have the statements, check with the payer for the details.

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fanfare

Employee

The year end amount for inherited IRA is the same wither it is in owner's name (her) or

owner and beneficiary name (you)

You always get only a portion of the basis non-taxable until you close the account.

@becky5000

dmertzAnswer

Employee

You should include the separately prepared Form 8606 with your printed and mailed tax return.

cabcam

why can't Turbotax handle inherited IRA 8606?

dmertz

Employee

Intuit has apparently made the business decision not to accommodate preparing Forms 8606 for inherited IRAs and instead requires the user to prepare the form separately and enter only the resulting taxable amount.