FORM 8606 for 2018 indicates the following:
1. Line 2 “enter basis in traditional IRAs” Is that cost basis as of 1/1/18 or 12/31/18 ?
2. Line 14 ” your basis in Traditional IRA’s for 2018 and earlier years”. Is this the cost basis as of 1/1/18 or 12/31/18 (after
deducting line 13 from line 1)
Just to see if I understand. Line 2 is the cost balance of non deductible IRAs as of 12/31/17 assuming there are no other of the transactions you noted such as adjustments to basis, rollovers, divorce transfers, inherited IRAs,etc.Line 14 is the cost balance as of 12/31/18 assuming contributions for 2018 were not made up until 4/15/19
Yes, that is correct for line 2. It includes the basis you had coming into 2018 from line 14 of your prior 8606. If you added more basis during 2018 from the misc transactions mentioned, line 2 is increased by these amounts. However, if you took a distribution in 2018 as well, the basis added from regular contributions made from 12/31/2018 to 4/15/2019 are subtracted out on line 4. This adjustment results in the computation of the taxable amount of any 2018 distributions being calculated only on the basis that was in the IRAs on 12/31/2018. Therefore, if you are looking at line 13 that indicates that you took a distribution in 2018 as well and the taxable amount of that distribution is calculated from lines 4-15c. Line 14 of the 2018 8606 will carry forward to line 2 of the 8606 that next follows 2018.
Permalink Submitted by David Mertz on Tue, 2019-07-30 22:36
Line 2 of Form 8606 is for basis in nondeductible traditional IRA contributions made for years prior to 2018, generally from line 14 (except it’s line 12 of 1993 through 2000 Forms 8606) of the most recently filed Form 8606 for some year prior to 2018, plus any adjustments to basis (with explanation) resulting from rollovers of after tax money from qualified retirement plans, transfers incident to divorce, and inheriting an IRA from a deceased spouse with basis in nondeductible traditional IRA contributions and treating the account as the surviving spouse’s own. Line 14 is the basis that carries over from 2018 to line 2 of the next Form 8606 to be filed. It’s a bit hazardous to consider it to be the basis on a particular date since IRA contributions that can increase the amount on line 14 of 2018 Form 8606 could have been made up until April 15, 2019.