8606 going away

[Possi]

My client used the 2 yr grace for converting traditional IRA to ROTH IRA. He has basis in his traditional IRA that has been carried on the 8606 all along.

I don't see where this basis will come out of the taxable conversion. I'm surprised TW didn't pick this up, so I am thinking that I'm probably doing something wrong.

[erchess]

Try calling or emailing support

at your software company. I feel sure that either the software has a small glitch that could be fixed in an update that would take only a few days to generate or you are making an error that they can explain to you. The software probably even has a way for you to email them the return so the agent can see what you are seeing.

[Possi]

I can do that...

...but they do not know tax law. Been there, done that.

I was reading the 8606 line by line and I don't see a place to pop that basis in for these conversions. It should be on page 2. That's why I was wondering what I was missing.

I'll keep looking...

thanks!

[erchess]

Look Again at the 8606

Net amount converted is put both on line 8 and line 16.

Nontaxable amount is shown on line 11 and carried to line 17 or if part one is not completed then the basis must be calculated per instructions.

At least now it is one hundred percent proven to me what I was only 99 percent sure of - the person doing the conversion does not pay tax on their nondeductible contributions. Now that we know for sure that's right the only question is whether your software has a glitch or you are doing something wrong. For that you will need help from someone who uses that software. Hang in there.

[Possi]

Conversion was last year?

I am reading this, and the actual conversion was done last year, with the option to take the taxable hit in 2011 and 2012.

The basis needed to be added back in LAST year. I don't know if I can un-ring that bell or not. You would think I could add the basis in this year, since this is the first year of the taxation, but I don't think I can. I think I needed to make that statement last year.

I'll keep reading.

He had a lot of recharacterizations come into this tax return this year. I bet there isn't any basis after all. When I did his return last year, that is when the non-deductible contribution was made to begin with. It probably circled completely and ended up exactly where it belonged...

[Burke]

You are right. The basis was to be added on the 8606 for last year. Now, whether you could go back and adjust that form and then re-carryover the corrected information, I can't tell you. I don't use that software. But I don't know why you couldn't amend for 2010.

[Possi]

thanks~

Thanks for that info. I believe I can amend the 8606 independently, too. I mean, without the tax return. I'll look into it.