Taxes and Penalties Already Paid… or Still to Pay?
I’ve recently seen a 1040A filed for 2010 for a single tax-filer under the age of 35, a year that also included a conversion of a traditional IRA to a Roth IRA in that year. No Form 8606 has been found yet for this conversion. However, boxes 11a and 11b for the 1040A do record a number. But this is only 10% of the entire amount that was converted.
Typically I would think that the full amount of the conversion is included in boxes 11a and 11b. However, the amount that was entered is exactly the amount that was taken from the IRA during the conversion process as federal withholding. The filer does not seem to have a copy of 1099-R, so these calculations seem to have been compiled using statements from the IRA provider.
What is the next step here for this filer?
Permalink Submitted by Alan - IRA critic on Sun, 2013-03-03 16:39
There should be an 8606 with the 2010 return (unless conversion recharacterized), but since the default rule for 2010 conversions is deferral to 2011 and 2012, line 11 should only include the withholding taken on the 2010 return. so the basic return could well be correct. Check to see if half of the converted amount was included on the 2011 return. Trying to secure a copy of the 1099R for 2010 is necessary to avoid guesswork. It’s also possible that part or all of the 2010 conversion was later recharacterized and there would be later 1099R forms for that, if applicable. Unless the taxpayer has basis in their TIRA, 2010 should not have to be amended just to add the 8606.
Permalink Submitted by Amar Patel on Sun, 2013-03-03 23:40
Permalink Submitted by Alan - IRA critic on Mon, 2013-03-04 04:14
Permalink Submitted by Amar Patel on Mon, 2013-03-04 17:22
Permalink Submitted by Alan - IRA critic on Mon, 2013-03-04 18:48
Permalink Submitted by Amar Patel on Sun, 2013-03-24 20:01
Permalink Submitted by Alan - IRA critic on Mon, 2013-03-25 04:52