ROTH conversion in 2010 but election not made
Client converted 120K from traditional to ROTH in 2010 and included entire amount as taxable in 2010. Formal election was not made on Form 8606. Can an amended 8606 be filed to correct this or is it too late. If it is too late then amended 1040 would be needed to remove 120K from taxable income, right?
Permalink Submitted by Alan Spross on Wed, 2012-10-10 19:10
The deadline to change a 2010 conversion election was 10/17/2011. The default rule for 2010 conversions was the two year tax deferral. The IRS has not indicated that they will accept conversion income reported on the 2010 1040 without an 8606 as an acceptable indication of opting out of the two year deferral. That said, if he wants the income taxable in 2010, there is no downside to asking the IRS if they will accept his 1040 as evidence of his intent to report all income in that year.
If not acceptable to the IRS, client should amend the 2010 1040 to include an 8606 showing the default two year deferral and no conversion income on p 1 of Form 1040. His 2011 and 2012 returns should each show 60k conversion income.