Missed filing Form 8606 for previous years
Hi, I have contributed to Non-deductible IRAs since 2007. I missed filing 8606 for the years 2009, 2019 and 2020. However the basis is correct on the last filed 8606 i.e. 2018.
I gather that IRS allows filing of these forms for prior years. A few questions:
1. Should I file for all 3 missed years or only for 2020?
2. Should I include a check for $50 penalty with each year’s 8606 form or does the IRS charge the penalty fee separately?
3. If so, whom should the checks be written to – US treasury department or IRS?
thank you!
Permalink Submitted by Alan - IRA critic on Fri, 2021-11-12 21:17
I don’t know how your basis could be correct on your 2018 8606 if you did not report your 2009 ND contribution, unless you added the basis to line 2 later on that you never reported on line 1. Have you taken any TIRA, SEP, or SIMPLE IRA distributions or converted a pre tax IRA to Roth since 2009? If so, if you send in a 2009 8606, you would have to amend all post 2009 8606 forms since the forms track your accumulated basis each year, and shows how much basis you are carrying forward on line 14. You would also need a 1040X to claim a refund that applied additional basis to any distribution since 2009.
The IRS has been accepting late filed 8606 forms and has not been charging any fee for underreporting basis. They would probably charge a fee if you over reported your basis however. So do not pay any fees unless you get an actual bill from the IRS.
Permalink Submitted by St Watson on Fri, 2021-11-12 21:43
Thanks for the quick response. I had contributed to the non-deductible IRA starting in 2007, 08, 09, 10, 2019 & 2020. Filed 8606 in 2007, 2008 & 2010 (missing 09, 19, 20). I have not taken any distributions or done any roth conversion until 2021. The basis in 2010 f8606 seems correct; I did not have any other IRAs before 2007 and as I remember, the tax software asked for the previous years contributions which were 4K, 5K, 5K, 5K for the years 2007-10. With no distributions or roth conversions does it make the process somewhat simpler?Should all three years’ 8606 be mailed in a single envelope or individual? I plan to include the corresponding 5498s for each year. Is there any other doc that I should include?
Permalink Submitted by Alan - IRA critic on Fri, 2021-11-12 22:05
Yes, much simpler if there have not been any prior distributions including conversions. If you think your 2010 8606 shows the correct prior basis and your basis continues to be correct up to 2019, then all you need to do send in your 2019 and 2020 8606 forms with a brief note that you neglected to file the forms with your tax returns. The 5498 forms help, but the IRS already has those, so sending copies is optional. You do not need a 1040X since these 8606 forms to not change any numbers on your 2019 and 2020 returns.
The 5498 forms only show that you made a contribution, they are never revised if you recharacterized your contribution to Roth or requested the return of your contribution, excess or not.
So this is really quite simple and line 14 of your 2020 8606 should show your accumulated basis going into 2021 when it sounds like you plan a conversion before year end. Your 2021 8606 will show any 2021 ND contribution and calculate the taxable amount of your conversion based on the adjusted year end value value of your non Roth IRAs and the amount you converted. Line 14 of your 2021 8606 will then show how much basis remains for use in 2022 and beyond.