Did not file all my 8606 forms

Forum|Forum|1 year ago
July 20, 2024
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Unfortunately, I missed filling out 8606 form for a number of years that I made after tax contributions to my rollover IRA. My understanding is that I can still fill them out now for the missing years and pay $50. I do have 5498 forms and financial statements showing the contributions for most of the years. Questions. Do I need any other documentation for missing 8606 forms? What do I do for the couple of years that I don't have documentation? Can I go ahead with any rollovers or distributions without sending in the 8606 forms to the IRS and then complete them if they request them? Thanks in advance.

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Best answer by fanfare

Out of the last 25 years it looks like I failed to include an 8606 5 times. I have 5498 for all but 5 of those 25 years but in those years, I have an 8606. Previous to that I do not have tax forms saved but I do have Schwab statements for all those years that show an IRA contribution of the maximum amount for that year and one 5498. I have always taken a non-deductible IRA. This issue started in 2007 when I put in a cost basis of $0. Before that the 8606 look to have the correct basis. Not sure why that happened. I guess I didn't transfer from the previous year in Turbotax. I really think they should make the 8606 a required entry and if no IRA was contributed a person puts in zero. Then Turbotax will make sure the history is transferred when the previous year is imported.

The prior year (2023) has basis of 7000. For 2023 I contributed 7500 so the current cost basis reported should be 14500. This makes the error to be 137000. Hopefully not big enough to trigger an audit.

I've always read that I only need to keep the last 7 years of records. In this case that is bad advice. I guess that's what I get for working 48 years straight and paying taxes. Sorry for the diatribe.

"For 2023 I contributed 7500 so the current cost basis reported should be 14500. "

that statement would be true if

"The prior year (2022) Form 8606 showed a basis of 7000. on Line 14 "

A correct 2023 Form 8606 would show a prior basis of all contributions up to and including 2022

and a contribution of 7500 on Line 1

The discrepancy is then ( $total contributions up to 2022 - $7,000 )

In other words your 2023 reported basis is changing from $7000 + $7500 to

$total contributions up through 2022 + $7500.

It seems simplest to file only a correct 2023, as I suggested earlier.

If IRS accepts the suggested explanation, they may not bother to look for any discrepancy on earlier forms.

@topmiller

fanfare

Employee

IRS is not going to request a Form 8606. You are responsible for filing those forms in the applicable tax years.

The proper way to file Form 8606 is attached to Form 1040-X.
Form 8606 can be mailed by itself only when you are otherwise not required to file a tax return.

Do you have the correct taxable amount on Form 1040 Line 4b and did not take a deduction? (Schedule 1 Line 20)?
If that is all true then only Form 8606 has to be attached.
After you e-File,
get Form 1040-X from IRS website and mail it in with your 8606, which you can also get in fillable PDF.
Note: when you are not changing any dollar amounts on your amending 1040-X, you can leave all the lines 1-23 EMPTY.

Part III explanation: "didn't include Form 8606 with e-File".

Done this way, you sign 1040-X, not 8606.
Do not include your old 1040 nor your revised 1040 because the Form 1040-X reflects any changes there and becomes your new tax return.

@topmiller

topmillerAuthor

Employee

Thank you for your reply. Looking at the years I did turn in the 8606, the basis is not correct because of the skipped years. So, I guess I have to do all 31 years? And for those incorrect years under part III explanation indicate the 8606 basis was not, correct?
Thanks!