IRA Cost Basis Question

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I messed up some years ago by not reporting my basis correctly or failing to report Form 8606. Before I get into that I have a question.

I made the following contributions to a Non-Deductible Trad IRA :

2008 : $4500 contribution
2008 : $366 recharacterized from Roth
2011 : $5000 contribution
2012 : $5000 contribution

Question : what is my total Ira Basis that I need to report in TT : $14500 or $14866?

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if its non-deductible, why do you have to report it?

I have a Roth IRA and I never reported my contributions.

Because it is a traditional IRA, not a Roth. If he does not report the basis the IRS will presume it is all pretax and therefore when it is converted or withdrawn he will owe tax on all of it.

I am not an accountant, but the recharacterized Roth IRA was never taxed, so I would say your basis is $14,500.

The topic is about Trad IRAs, not Roth. A person tracks non-ded Trad IRA contributions so that when they make a withdrawl or convert to a Roth they don't have to pay taxes again on that amount.

Anyway, back to OP. You've made $14866 in non-deductible contributions, so that would normally be the basis (well, $9866 in basis for prior years plus $5000 in new contributions, for a total of $14866). However, the bigger question is whether you have to amend taxes for prior years to be able to claim a basis for prior years (or do a short-cut procedure because Form 8606 can be filed on its own). I don't have the answer to that, though google has a few suggestions like:

http://taxes.about.com/b/2007/02/09/forgot-to-file-form-8606-for...

You need to report each non-deductible contribution separately using the correct form for each year (form may change somewhat yr to yr), starting w/ the earliest yr and working forward in sequence.
Don't know if TT will do that. Alternative is to do paper getting forms from IRS. Ask your question at retirement subforum at fairmark.com to get the real answer but my guess is that your basis is
14866 +/- x, so close to 14866 but perhaps slightly different.

Ex: you contribute 4K to Roth but due to market changes the account declines to 3660. When you recharacterize, 366 ends up in your account (10% of the value). It is as if you contributed 400 (10% of 4K) to
the TIRA originally so your basis is 400 for the recharacterized amount. Your broker should be able to give you that number.

OP, what was the amount of the contribution that resulted in the recharacterization of $366? Was it $500 to Roth & $4,500 to traditional and then you recharacterized the Roth (which was then worth $366)? If so, I believe your basis is $15,000.

You should just make sure that you file a form 8606 this year with the correct basis. You do not need to amend your past returns--if ever questioned on the issue, you could substantiate that you made the contributions & did not deduct them in prior years.



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