Negative amount on line 18 of Form 8606
Made a $5,000 nondeductible traditional IRA contribution for 2009 in 2010. Also made a nondeductible traditional IRA contribution of $3,000 for 2010 in 2010. Made the other $2,000 in 2011. Converted entire traditional IRA account in late 2010 to Roth IRA. Amount was $7,920. I figure basis in the distribution was $8,000. TurboTax prepares the 8606 like this:
Line 1 5,000
Line 2 5,000
line 3 10,000
Line 4 2,000
Line 5 8,000
Nothing on lines 6-15
Line 16 7,920
line 17 8,000
line 18 (80)
line 20a (40)
line 20b (40)
Is it really correct to have a negative amount on line 18? It doesn’t seem to carry through to the 1040 anywhere.
Thanks so much for your help.
Permalink Submitted by Alan Spross on Wed, 2011-04-13 00:54
I don’t use TTax but others have indicated that the program uses a worksheet from Pub 590 (probably p 42) to replace the indented lines 6-12 on the 8606. Can only guess the reason to be a programming shortcut, but apparently the IRS accepts this.
Technically, the negative amounts you show should be 0, but again this does not seem to change the correct amounts on other lines. Since none of the conversion is taxable, in your case the program does not seem to create an error regarding the conversion itself.
But I would be concerned about the lack of a figure for line 14, which shows the basis to be carried to 2011. The correct amount there would be 2,080. That means your next conversion is also tax free until the value of the TIRA exceeds 2,080.
The supplemental worksheet produced by the program should be printed for future reference just in case a problem surfaces. But since Ttax has millions of users, I assume the IRS has OKed the result of their programming shortcut.