Roth conversion
Client reported their Roth conversion as taxable IRA income on their tax return. The 8606 was filed with the return. They failed to complete the necessary conversion paperwork with the custodian. The account still states it’s an IRA rollover. Are there any penalties for not completing the paperwork for the custodian?
Permalink Submitted by Alan - IRA critic on Fri, 2014-04-04 20:38
I don’t understand what happened here, but if a conversion never occurred, client needs to amend their return for a refund. It is odd that a conversion would be reported when no 1099R was issued. If the custodian made an error, in order to have any recourse the error would have to be without any client negligence, ie 100% custodian error.
Permalink Submitted by James Krekeler on Fri, 2014-04-04 21:01
Client paid the taxes owed but never completed conversion paperwork so no 1099R was ever issuued. Can they request a refund for the taxable IRA income they paid?
Permalink Submitted by Alan - IRA critic on Sat, 2014-04-05 00:23
Yes, if they never did the conversion, they can amend the return on a 1040X and eliminate the conversion reported on Form 8606 and receive a refund for the taxes paid for the conversion that never got done.