Past Roth conversion…forgot to use IRA basis
I have a long-standing traditional IRA, some of which is nondeductible.
In the past, I had to take one distribution with penalty, and I have done a few partial conversions to Roth.
The problem is that I think I forgot to adjust the IRA basis when I did one or two conversions. So I paid full taxes on those conversions. .I did a conversion in 2015, and want to know if I can just enter the last basis amount that was calculated in a previous year..
I’ve been retired for several years, so I only need to do an 8606 when I do a conversion or distribution. I use TurboTax, and just noticed a small conversion in 2014. Nothing (total value of IRAs, basis, etc) was entered on the 8606 except for the conversion amount.
I’m getting ready to gather together the rest of my previous tax returns to find out when I started neglecting to adjust the basis. but it would be easier if all I had to do is find the last calculated basis and go from there.
Thanks
Permalink Submitted by Alan - IRA critic on Fri, 2016-01-29 17:24
Sounds like you filed the 8606 forms when your non deductible contributions were made, so the error is only for the distributions. Right now years 2012-2014 are still open, so you should amend your returns for those years and receive a refund for application of your basis. You are not allowed to simply use your basis when you want to, so you would amend the oldest year first applying the basis, and then take line 14 from that 8606 and move that basis forward to the next year. You need to do that in order to arrive at the correct amount of remaining basis to apply in reporting your 2015 conversion. Turbotax has different editions, but the one I use has you enter your gross distribution or conversion, then asks if you have basis later. The only two figures you need to enter are your remaining basis from line 14 of your last 8606, and the value of all your non Roth IRA accounts as of the end of the year you are filing for.