Forgot to file form 8606 (Non Deductible IRA)

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ntcxyz
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Joined: Mon Jan 20, 2014 8:46 pm

Forgot to file form 8606 (Non Deductible IRA)

Post by ntcxyz »

Hello everyone,
Over the years, I sometimes put money in IRA but forgot to file form 8606. What's the best way to correct this issue? I've moved the IRA accounts around as well as combine.mix them up in the mean time, too.

Thanks in advance.
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Duckie
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Re: Forgot to file form 8606 (Non Deductible IRA)

Post by Duckie »

As long as you kept records each year of how much you contributed and how much was non-deductible, moving things around, combining and mixing things doesn't matter. IRS Form 5498 and your old IRA statements show how much you contributed. IRS 1040 Form shows what, if anything, you deducted.

You are allowed to file Form 8606 separately. I think you can download forms from previous years. So download, fill out, and mail in.
DSInvestor
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Re: Forgot to file form 8606 (Non Deductible IRA)

Post by DSInvestor »

At http://www.irs.gov, click forms and pubs. There you will you will be able to find prior year forms and pubs.
If you can't find your 5498 forms, you can request transcripts for free from IRS. Use form 4506-T and you can get 5498 transcripts for up to 10 years.
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ccieemeritus
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Re: Forgot to file form 8606 (Non Deductible IRA)

Post by ccieemeritus »

In 2013 I read Ric Adelman's book (the Truth about Money) and learned I failed to file the 8606 in 2005 and 2004 for my wife and I.

In theory there's a penalty for late submission. I sent in the 2005/2004 8606 forms late (separate from a tax return)
with a polite but short cover letter explaining that we were unaware of the requirement until very recently.

So far no request from the IRS to pay a penalty. Since then I'm careful in TT when responding to the cost basis in retirement accounts section.
Topic Author
ntcxyz
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Re: Forgot to file form 8606 (Non Deductible IRA)

Post by ntcxyz »

Thank you for all the answers. I really appreciate it.
Leeraar
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Re: Forgot to file form 8606 (Non Deductible IRA)

Post by Leeraar »

ntcxyz wrote:Hello everyone,
Over the years, I sometimes put money in IRA but forgot to file form 8606. What's the best way to correct this issue? I've moved the IRA accounts around as well as combine.mix them up in the mean time, too.

Thanks in advance.
It is a very good idea to update your 8606 every year and file it with your tax return. Whether the rules say so or not. Keep it current.

L.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")
Leeraar
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Re: Forgot to file form 8606 (Non Deductible IRA)

Post by Leeraar »

Leeraar wrote:
ntcxyz wrote:Hello everyone,
Over the years, I sometimes put money in IRA but forgot to file form 8606. What's the best way to correct this issue? I've moved the IRA accounts around as well as combine.mix them up in the mean time, too.

Thanks in advance.
It is a very good idea to update your 8606 every year and file it with your tax return. Whether the rules say so or not. Keep it current, even if the change is zero.

L.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")
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bUU
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Re: Forgot to file form 8606 (Non Deductible IRA)

Post by bUU »

Leeraar wrote:
ntcxyz wrote:Hello everyone,
Over the years, I sometimes put money in IRA but forgot to file form 8606. What's the best way to correct this issue? I've moved the IRA accounts around as well as combine.mix them up in the mean time, too.

Thanks in advance.
It is a very good idea to update your 8606 every year and file it with your tax return. Whether the rules say so or not. Keep it current.

L.
My understanding, though, is that you need only do so when you have non-deductible contributions. Correct?
Leeraar
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Re: Forgot to file form 8606 (Non Deductible IRA)

Post by Leeraar »

bUU wrote:
Leeraar wrote:
ntcxyz wrote:Hello everyone,
Over the years, I sometimes put money in IRA but forgot to file form 8606. What's the best way to correct this issue? I've moved the IRA accounts around as well as combine.mix them up in the mean time, too.

Thanks in advance.
It is a very good idea to update your 8606 every year and file it with your tax return. Whether the rules say so or not. Keep it current.

L.
My understanding, though, is that you need only do so when you have non-deductible contributions. Correct?
That is correct.

But it is something you have to track over decades. Updating it each year is the simplest thing to do.

L.

(Edited for typo.)
Last edited by Leeraar on Mon Mar 17, 2014 2:16 pm, edited 1 time in total.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")
Alan S.
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Re: Forgot to file form 8606 (Non Deductible IRA)

Post by Alan S. »

ntcxyz wrote:Hello everyone,
Over the years, I sometimes put money in IRA but forgot to file form 8606. What's the best way to correct this issue? I've moved the IRA accounts around as well as combine.mix them up in the mean time, too.

Thanks in advance.
It is easy to file the forms retroactively and the IRS never charges a penalty unless you OVERSTATE your basis. However, if you have taken distributions including Roth conversions prior to the last 3 years, you will lose the basis that should have been applied because those years are now closed to amendments (Ref RR 82-49). Distributions done within the last 3 years will result in the need to amend those returns to apply the new remaining basis amount to those distributions and you would get a small refund from the amended returns. If you do not want to bother with amending the open years, you still have to do the 8606 calculation to determine how much basis you would have used had you amended.

In other words, you cannot just save up basis for years that you do not want to apply it to increase the amount available for years that you want to apply it. If you have taken distributions, sending in the new 8606 forms could create a ton of paperwork for you.
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