Corrected 8606s
How do I go about filing a corrected Form 8606?
Facts:
Form 8606 was filed for taxpayer 2017 with Line 2 Total Basis incorrect
Form 8606 was filed for 2018- 2019 obviously incorrect as well since Line 2 is a carryover from prior year which was incorrect in 2017
Questions:
When filing the 2020 Form 1040 and thus the Form 8606, can I use the correct number for Line 2 Total Basis and that brings everything up to date or do I have to file amended returns for 2017-2019 showing correct Line 2 amount. If so I guess I would file amended returns first and then for 2020 tax year wait a bit to file and then assume amended returns were accepted and use corrected amount?
If i need to file amended 8606s can they be filed standalone or do i need to file Form 1040X. I assume no penalties for filing since the 8606s were all filed on time they just contain an error
Thanks as always
Howard
Permalink Submitted by Alan - IRA critic on Wed, 2021-02-24 22:03
If taxpayer did not take a distribution from 2017-2019 they can file an amended 8606 for each year without a 1040X, but would need a 1040X if there was a distribution taken that reported the wrong basis. No need to wait to file 2020 unless there was a 2020 distribution. There is plenty of evidence that the IRS does not keep tabs on Form 8606 accuracy, so would not wait more than 4 weeks to file after the amended 8606 forms are sent in.
Permalink Submitted by Howard Hook on Wed, 2021-02-24 22:53
Thanks Alan.No distributions have been taken during 2017- 2020. So it appears that amended 8606s can be filed without 1040X.RegardsHoward
Permalink Submitted by Justin Busch on Mon, 2023-02-20 19:49
Hi, I know this is a bit stale, but I have a similar question. When you say “no distribution was taken,” do you mean in reality or do you mean no 1099-R was triggered. Specifically, if there was a Roth conversion of these funds, do I need to file a 1040X for each year even if the tax consequences are the same? Sorry about the length, but I’ll provide the details in case that makes answering my questions/situation easier.I had been using a tax preparer who seems to have been filing the 8606 wrong. Spouse has been making non-deductible contributions to traditional IRA and converting immediately to Roth in year X for tax year X-1 since 2019 (contribution for tax year 2018). To be clear, spouse made $5500 2018 tax year contribution/Roth conversion in February 2019, $6000 2019 tax year contribution/conversion in March 2020, $6000 2020 tax year c/c in April 2021, $6000 2021 tax year c/c in March 2022, and will be making $6000 2022 tax year contribution soon.Due to this, spouse has received 1099-R for Roth conversion for each tax year since 2019. However tax preparer was filing an 8606 without identifying the contribution as happening in the filing year and, therefore, no 8606 shows a basis on line 14. That ended up having the same tax consequences because none of it was deductible and the contribution limit was $6000 in each year. But, it seems to me that it is (improperly) treating the 2018 tax year contribution as a 2019 contribution that then appears to be linked to the 1099-R distribution for 2019.I guess the ultimate question is – can i file an 8606 for each of tax years 2018 through 2021 showing the basis of $6000 on line 14 in each year, then just file an 8606 with showing a $6000 basis for 2022 with this year’s 1040?(Not relevant to the question, but I have convinced spouse to make contributions/conversions during the corresonding tax year, so a double-up this year. Not sure that will really avoid complications in the future as we will need to file an 8606 for the Roth conversion every year anyways?).
Permalink Submitted by Alan - IRA critic on Mon, 2023-02-20 22:48
An 8606 is required for each year in which a conversion is done to report the conversion, and an 8606 is also required for the year FOR WHICH any non deductible contribution is made. Therefore, it appears that the contribution for TY 2018 might not have been reported at all and not carried over to line 2 of the 2019 8606. However, this error may have temporarily offset by not completing line 4 of the 8606 to subtract out prior year contributions. The IRS rarely checks basis reported on Form 8606 for accuracy. To save work, you could file the 2022 8606 with the prior year contribution shown on line 2, and attach an explanatory statement that the line 2 amount reflects a 2018 ND contribution that was never reported, but that all prior returns are not affected. If you trust this to a tax preparer, you will have to be sure they understand the situation.