IRA year-end value affecting taxes due?

Forum|Forum|1 year ago
March 27, 2025
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There were NO distributions from a Traditional IRA nor was any RMD required, yet when I enter the 12/31/24 FMV, why does the amount of tax due increase?

Best answer by dmertz

The only reason that entering your year-end value in traditional IRAs would affect your tax due when you have entered no Forms 1099-R reporting distributions from traditional IRAs is if the year-end value was involved in determining the penalty for having made an excess traditional IRA contribution. Check to see if you have Form 5329 Part III calculating such a penalty. Also check to see that you have nothing on line 7 or 8 of a Form 8606 that would indicate that you entered a Form 1099-R that reports a distribution from a traditional IRA.

dmertzAnswer

Employee

wmoerschAuthor

Thanks, but no Form 5329 or anything on lines 7 or 8 of the relevant Form 8606. However, on Form 8606, the box after line 3, Did you take a Distribution?, "No", indicates to go on to line 14, yet the rest of the Form is filled out as "Yes." How do I correct that? There were distributions from other IRAs / Annuities, but not this one.

wmoerschAuthor

Update: I found the problem -- confusion between multiple payees checking the IRA / SEP / SIMPLE box, but not related to the Traditional IRA. The upside is nondeductible basis was not reduced; the downside is that additional taxes ARE due.