Form 8606
I have a client who’s accountant incorrectly filed the 8606 for 2008. The 8606 reads that he has total basis in his IRA for $270,000, but he really only has a basis of $12,000 (The $270,000 was actually the year end value in 2008). Does he need to amend the 8606 or can simply “correct” it by filing a new 8606 for 2009?
Permalink Submitted by mk foss on Thu, 2009-08-13 17:08
There are penalties for not filing Form 8606 and penalties for claiming basis for a distribution when Form 8606 was not filed. I do not know of any penalties for filing Form 8606 incorrectly. I see no difficulty if it is just filed with the 2009 return showing the proper amount of basis carrying forward.
Permalink Submitted by george collins on Fri, 2009-08-28 21:32
Mary Kay, I like your suggestion to just resubmitt the 8606 this year, but it seems to me a 1040x for the correct year, keeps the IRS happy and the correct tax rates in the correct years.
???
jerry
Permalink Submitted by mk foss on Sat, 2009-08-29 00:29
Form 8606 is a stand alone form. It can be signed on the back page and sent in without From 1040X.
I’ve had clients send in “late” Forms 8606 separately with a letter asking that any penalties be waived. In at least one instance, IRS sent the forms back with no understandable explanation.
Since you are reporting less basis, I think there is no problem with waiting until 2009.
Permalink Submitted by george collins on Sat, 2009-08-29 15:18
Mary Kay, in my case I will be reporting more basis. When I did the turbotax, I used my name instead of my wife and did not use her larger basis.
thanks in advance
jerry
Permalink Submitted by mk foss on Tue, 2009-09-08 02:18
Those Forms 8606 can really cause problems. These are my thoughts on them.
1. If you didn’t file them in the year that you made a contribution, file them late and ask that any penalties for not filing be waived. You can file just the Forms 8606 without attaching Form 1040 X.
2. If you filed them with your return and there was an error, put the correct information on the next year’s return and attach a statement explaining what happened. OR if you’re very nervous file a new form, mark amended on the top and send it to the IRS.
When the forms are received separtely from the original 1040, they don’t always go to the right place and may be sent back with a confusing letter. I always prefer sending them with an original 1040 – the exception being if you failed to file them originally.