Form 8606 Line 6: Ending Value with or without Accrued Income?

For the first time, for the 2017 tax year, I had a non-zero entry to make for Line 6 in Form 8606 (“Enter the value of all your traditional, SEP, and SIMPLE IRAs as of December 31, 2017, plus any outstanding rollovers.”). Simple enough, right? I pulled up my Schwab traditional IRA statement for the period ended on December 31, 2017, and I found the value next to “Ending Value with Accrued Income”. I plugged it in, completed the Form 8606, and moved on with life.

Now, for the 2018 tax year, I’m doing the same exercise. Except this time, I guess I looked at my statement a little closer and realized that Schwab also gives me “Ending Value on 12/31/2018”. That value is smaller than the 2018 value for “Ending Value with Accrued Income”. Not by a huge sum (under $100), but smaller.

Now I’m confused. Which am I supposed to use on Line 6 in Form 8606? If I used the wrong one for the 2017 tax year, do I amend my 2017 filings, so that I can use the corrected values from my 2017 Form 8606 in my 2018 Form 8606 (Line 2)?



Because the accrued income has not been received in the account at year end, the “ending value on 12/31/xxxx” is used for Form 8606 line 6 purposes. Of course, for line 6 you are using the year end value of the current tax year. The same “ending value” is also used for RMD calculation once your RMDs begin, but in that case the prior year end value is used to determine the current year RMD. Schwab will also report your year end balance for the prior year on Form 5498. Therefore, by May 2019 you should receive a 5498 indicating your 12/31/2018 year end value which is the same figure that shows on your Dec statement. If you used the higher figure that included accrued interest on your 2017 8606,  it would have resulted in a small increase in the taxable portion of your conversion, probably too small to bother amending your 2017 return.



Thanks for the response! A follow-up: For 2017, my “Ending Value on 12/31/2017” and “Ending Value with Accrued Income” was off by less than $2.00 I think. And it indeed seems as if that error is in favor of the IRS.Small as it might be, however, do I correct it anyway, either in my calculations or formally with an amended filing, because of how I have to use 2017 Form 8606 to populate entries for 2018 Form 8606? Or do I carry this error in perpetuity?



Most likely, the difference would not even increase the amount of basis applied to the distribution. Just carry the line 14 amount of the 2017 8606 to line 2 of the 2018 8606.



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