Discussion:Form 8606 - Nondeductible IRA Contributions
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| Revision as of 01:22, 30 March 2009 Kevinh5 (Talk | contribs) (since the 8606 a) ← Previous diff |
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| {{ForumReplyPost|UserID=Kevinh5|Date=30 March 2009|Text=since the 8606 allows a signature on the form (or at least it used to), no need for the 1040-X. Just file ALL the missing 8606's (even before the SOL for refunds). That's what I've done in the past, Jake.}} | {{ForumReplyPost|UserID=Kevinh5|Date=30 March 2009|Text=since the 8606 allows a signature on the form (or at least it used to), no need for the 1040-X. Just file ALL the missing 8606's (even before the SOL for refunds). That's what I've done in the past, Jake.}} | ||
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| + | {{ForumReplyPost|UserID=Jake|Date=30 March 2009|Text=Kevin - but did they hit you with the $50 penalty each year?}} | ||
Revision as of 04:34, 30 March 2009
Discussion Forum Index --> Advanced Tax Questions --> Form 8606 - Nondeductible IRA Contributions
Discussion Forum Index --> Tax Questions --> Form 8606 - Nondeductible IRA Contributions
| 6 March 2009 | |
| I am running into clients that have in the past made nondeductible IRA contributions but did not file a Form 8086. In some situations their income level and pension coverage barred a deductible IRA contribution, In others, they just did not deduct. Is this fatal to calculating a basis for an IRA? Does the IRS keep track of these 8086 numbers anyway?
If I amend open years, do I just file the Form 8086 or do I have to do a 1040X? This came up as for some I have suggested a ROTH conversion now that values have sunk so low. For some the current value is less than their past nondeductible contributions. | |
| 6 March 2009 | |
| I think 8086 is an old computer processor. Form 8606 is where you would find basis information. It's not required to be filed until they take money out. However, it's definitely best practice to preparer it every year so that they can keep track of what their basis is. If in 20 or 30 years they're pulling money out whoever does that tax return would be very happy if they had an 8606. | |
| 6 March 2009 | |
| Oh rereading that, you might be talking about the year of contribution. They would file 8606 when they make the contribution as well. Not sure what would happen if they failed to. | |
| 6 March 2009 | |
| It is late - I meant Form 8606.
I thought I would examine all the IRA statements and prepare a 8606 for 2008 - fill in the prior basis, and the 2008 contribution. | |
| 6 March 2009 | |
| If the 8606 was not filed, then any elections that should have been made were not made. In other words, if the client wants basis from an otherwise deductible contribution, he really needs to file the 8606 to make a valid election. | |
| 6 March 2009 | |
| What if it was not an otherwise deductible contribution - i.e. not deductible due to a high income and already having a workplace pension plan? | |
Msmith7305 (talk|edits) said: | 7 March 2009 |
| Jake -
Have you even bothered to look at the Form 8606 instructions? If so, you would see, absent reasonable cause, there is a $50 penalty for failure to file the form when required. You are required to file if you make a non-deductible contribution. You are also required to file when you take money out of an IRA that has a basis of more than zero. (There are also a few more exotic circumstances where a filing is required). The form can be filed by itself. Take a look at it. It tells you all of this. | |
| 30 March 2009 | |
| Reasonable cause - can that be that taxpayer just did not understand the need for this filing? We have big banks screwing the govt out of millions and the IRS is worrying about a total of perhaps $5,000 in non-reported nondeductible IRA contributions? She was putting in $50 a month.
Here is what I plan on doing: What do you think. 2007 - file a 1040X as it turns out the amount of that IRA contribution for that year would be deductible because taxpayers income took a dive in 2007. Taxpayer will get a refund. 2006 - send in the 8606 attached to a 1040X explaining only change is reporting the nondeductible IRA contribution. 2005 - send in the 8606 attached to a 1040X explaining only change is reporting the nondeductible IRA contribution. 2004 and earlier - leave those sleeping dogs alone. The 2005 and later would have the correct carry forward numbers including the nondeductible amounts from 2004 and earlier. This person is thinking about taking a year off to go back to school. In that year we convert to ROTH and gioven the stock market decline I do not think the conversion amount will hit the taxable income level. | |
| 30 March 2009 | |
| since the 8606 allows a signature on the form (or at least it used to), no need for the 1040-X. Just file ALL the missing 8606's (even before the SOL for refunds). That's what I've done in the past, Jake. | |
