I Have an Error on Form 8606 - Non-Deductible IRA
If you encounter an error while completing Form 8606 for non-deductible IRA contributions, it’s important to understand the form’s purpose and how to correct mistakes.
Purpose of Form 8606
Form 8606 is used to report:
- Nondeductible contributions to traditional IRAs
- Distributions from traditional IRAs if you have a basis in these IRAs
- Conversions from traditional IRAs to Roth IRAs
- Distributions from Roth IRAs
Common Errors and How to Fix Them
Errors often occur when calculating basis or reporting distributions. Here are key points to check:
- Basis Tracking: Your basis in traditional IRAs includes all nondeductible contributions and nontaxable rollover amounts, minus any nontaxable distributions. Keep accurate records.
- Distribution Reporting: If you received a distribution from a traditional IRA with basis, you must report it on Form 8606 to determine the taxable portion.
- Roth IRA Distributions: Report Roth IRA distributions in Part III of Form 8606 if you have basis or if the distribution is not qualified.
- Amendments: If you need to correct a contribution (e.g., change from deductible to nondeductible), you can file Form 1040-X with an amended Form 8606 within the allowed time frame.
How to Correct an Error
To fix an error on Form 8606:
- Review your records: Forms 5498, 1099-R, and previous tax returns.
- Recalculate your basis and distributions using the instructions for Form 8606.
- If needed, file Form 1040-X with a corrected Form 8606.
For assistance, Online Taxes (OLT) software can guide you through adding or editing Form 8606 during your tax return filing process.
Source:
Form 8606 - Nondeductible IRAs
Disclaimer: Always verify information with official IRS forms and instructions or consult with a tax professional. The information provided is based on retrieved context and may not reflect all applicable rules or updates.