8606 taxable income

Forum|Forum|4 years ago
April 2, 2022
1 reply
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Form 8606 line 7 is using the (presumed) Taxable Income rather than the Gross income resulting in an incorrect taxable portion. With 2 IRA's for each taxpayer, there is no worksheet showing the re-computed taxable portion on the 1040-SR

Lacerte Tax

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qbteachmt

Level 15

What is the code on the 1099-R? What is the amount that is Gross, Taxable, what sort of distribution was this (Trad IRA?), is there Basis, and have you entered all of this?

How does having 2 IRAs for each taxpayer apply to this one person's activities? This is a form for reporting for Individuals. Not Joint. How old is your taxpayer?

More details would be helpful.

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RedwoodQuilterAuthor

Level 3

All are code 7.

Since client rolled over non-deductible contributions from one brokerage to another, the taxable amounts shown by the current brokerage are not correct.

Client and spouse each have one regular and one rollover IRA. Yes, separate 8606 are being prepared for each. Taxpayers are in yr 2 of retirement

Example: Gross Distributions for Spouse: 28K Taxable Amount per 1099R: 27K. Entered these amounts in Input sheet 13.

F 8606 Line 7 picked up only 27K. I changed the Taxable Amt on Input sheet 13 back to 28K so it would appear on Line 7 of 8606 and compute the correct taxable amount of $26K on line15c. Entered the Corrected Taxable of 26K back into input sheet 13. F8606 then went back and recomputed using Line 7 as 26K, now with Taxable Income of $25.5K.

qbteachmt

Level 15

All? As in, more than one 1099-R.

"Since client rolled over non-deductible contributions from one brokerage to another"

That's not pertinent. What you need to know is Account Type(s). Whether also between brokers or not, isn't applicable to tax status of the event. Account type/plan taken From, and then Account type/plan put Into?

And you stated Rolled; did it meet the deadline?

"Client and spouse each have one regular and one rollover IRA."

Regular = Traditional IRA? Rollover = Traditional IRA? Roth IRA? Rollover is like stating "deposited" and not Account/Plan Type.

Transfer or Direct = the people didn't have the money available to them in between.

Rollover = the people had access to that money in between, might have even used it, and need to make that Deposit in a timely fashion to qualify as Not a Distribution, after all.

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