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Level 2
March 17, 2025
Question

Why does line 6 disappear when the IRA contribution becomes non-deductible

  • March 17, 2025
  • 1 reply
  • 13 views

Edit: It puts it all on the 590 worksheet.  But why does it go to a worksheet rather than stay on the form?  

 

67 year old client made a $6,500 IRA contribution.  This year she also ended her LLC and s-corp status in 2023. She shouldn't have done that.  She owes over $10k right now.  So the thought was to do a SEP IRA to reduce her liability by about $1k.  But when I do this in the software the line 6 value of all IRAs disappears.  She also took a distribution from this IRA this year and had basis so I need the 8606 to be correct.

Why is the total value of the IRAs (line 6) being removed from the 8606 when the $6,500 becomes a non-deductible and I use the max compute SEP IRA?  

AND on another note - I also thought that you could do both the deductible IRA contribution and the SEP IRA contribution.  But the software is turning the IRA contribution into non-deductible when I do the max SEP.  ANSWER:  Because AGI >$87k

Help please and thank you!

 

 

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    1 reply

    qbteachmt
    Level 15
    March 18, 2025

    She can contribute $8,000 to the SEP IRA. I'm assuming this plan hasn't been established. Do you have the 1120S on extension?

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