Question

I made a nondeductible contribution to my traditional IRA in 2021, but my 2021 tax return doesn't have a Form 8606. Why?

Forum|Forum|2 years ago
March 27, 2024
2 replies
0 views

I made a nondeductible contribution to my traditional IRA in 2021 (6k), and another nondeductible contribution to my traditional IRA in 2022 (6k). Looking back now, My 2021 tax return doesn't have a Form 8606. I went to try to amend my tax return on TurboTax, and saw that I definitely reported it in the software correctly...so there's nothing for me to even fix through TurboTax.

But my 2022 tax return does have Form 8606, but the listed total basis is 6,000. I'm not sure where I went wrong, but I think the total basis for 2022 should've been 12,000.

I also made a nondeductible contribution for 2023. So for my 2023 tax return, is my cost basis from previous years $6,000? Or $12,000? How do I correct what happened?

TurboTax Premier Online

O

Opus 17

We can't tell you what happened in the past, and we can't see your returns.

Looking at form 8606 for 2021, line 2 (prior basis) would be zero and line 14 (new basis) would be $6000.

For 2022, line 2 (prior basis) would be $6000 and line 14 (new basis) would be $12000.

For 2023, line 2 (prior basis) should be $12,000 (based on your history).

If you didn't do any conversions and are only reporting basis, and it doesn't change your tax owed or refunded, you can file an amended form 8606 for 2021 and 2022 by themselves without filing a whole amended return. Be sure to use the correct version for each year.

Start by checking your tax transcript for 2021 online to see what the IRS has on file for you.

https://www.irs.gov/individuals/get-transcript

For 2023, you can enter that you have a prior basis of $12,000 without having to amend first. But make sure you keep records of your contributions and your form 8606. You need to keep that for as long as you live (or until the IRAs are emptied out) because the IRS will not keep track of your basis, if you want to prove that a portion of your retirement withdrawals are non-taxable, the burden of proof is on you.

U

User030620Author

Thanks! For looking at tax transcripts - is the correct one to look at "Wage and Income"? I do see my contributions under "IRA Contributions", though I don't see whether these were marked as deductible or nondeductible. It looks like I also made a 2020 contribution, but I only have the transcript for that and not the tax return. Regardless, it seems like that wasn't tracked in From 8606 either. Do I confirm that this was a nondeductible contribution by checking whether my MAGI for that year was over the deductible limit, or is there a way to see that in the transcript?

O

Opus 17

@User030620 wrote:

Thanks! For looking at tax transcripts - is the correct one to look at "Wage and Income"? I do see my contributions under "IRA Contributions", though I don't see whether these were marked as deductible or nondeductible. It looks like I also made a 2020 contribution, but I only have the transcript for that and not the tax return. Regardless, it seems like that wasn't tracked in From 8606 either. Do I confirm that this was a nondeductible contribution by checking whether my MAGI for that year was over the deductible limit, or is there a way to see that in the transcript?

You should be looking at your tax return transcripts. For example, in 2021, the IRA deduction was on schedule 1, line 20. The total of adjustments on schedule 1 is reported on schedule 1 line 26, which carries over to form 1040 line 10. If you deducted the contributions, that would be reflected on schedule 1 and form 1040 line 10. You might also have other adjustments on schedule 1, so you need to consider your return as a whole. If you have a printout, compare the printout with the transcript. For other years, the line numbers may be different but deductible IRA contributions are still on schedule 1, if you need to know the exact location, you can download PDFs of specific forms for specific years from the IRS web site.

Your tax return transcript should also include a record of form 8606 if you filed one.

The wage and income transcript is probably only picking up form 5498 from the IRA trustee. They know what you contributed but they don't know if you deducted it or not, that would only be on your tax return. If you have no IRA deduction on schedule 1 and no form 8606 either, then you didn't report it properly. You can either file an amended return to make it deductible (depending on income and other facts) or file an amended form 8606 to make it non-deductible. Since form 8606 has a separate signature line, I believe you can file the amended 8606 by itself as long as it does not change your tax.

S

spiach2009

Last year I made a tax deductible IRA contribution of $1,000 during the filing season for my 2023 return. I am doing the same in 2024 but when I look at the federal review section it says my contribution for 2023 is zero. When I open 2023 turbotax my federal review includes the $1,000. Why is last year contribution made in 2024 for 2023 not showing up on my 2024 federal review?

O

Opus 17

@spiach2009 wrote:

Last year I made a tax deductible IRA contribution of $1,000 during the filing season for my 2023 return. I am doing the same in 2024 but when I look at the federal review section it says my contribution for 2023 is zero. When I open 2023 turbotax my federal review includes the $1,000. Why is last year contribution made in 2024 for 2023 not showing up on my 2024 federal review?

I can't explain why Turbotax might show you an incorrect year over year comparison. To verify that you did made a deductible IRA contribution on your 2023 tax return, download, print or open the PDF of your 2023 tax return and look at schedule 1, line 20.