Level 2

Solved

Why isn't Form 8606 calculating to make some IRA distribution nontaxable

Forum|Forum|19 days ago
August 21, 2026
7 replies
125 views

I’m working on a family’s tax returns. Grandpa died and left some IRA to his kids (2) and grandkids (4). There was basis in the IRA.

One grandkid’s tax return came out just as I expected. I entered basis in the IRA and the 12/31/25 value. Form 8606 calculated the nontaxable portion of the 2025 distribution.

The other five tax returns I entered the same information, but not Form 8606 is not being generated and the whole beneficiary IRA distribution is being taxed.

Nobody has their own traditional IRA.

All of the grandkids are claimed as dependents on their parents tax return.

I’m pretty sure I entered the information the same way in each return--using the IRA info worksheet and can’t figure out what’s going on.

Help!

IRA

Best answer by Just-Lisa-Now-

Maybe print out the 1099R worksheet and the IRA worksheet for each return and compare the one that works to the other ones? Maybe you’ll see a difference?

BobKamman

Level 15

Are there six separate inherited IRA accounts, one for each beneficiary? Did you pro-rate the cost basis among all of them?

U

UBBullAuthor

Level 2

Yes, each person has a separate account and all took RMDs in 2025. I split up the basis based on the % inhearited (25% for kids and 12.5% for grandkids).

Just-Lisa-Now-

Answer

Intuit Community Champion

Maybe print out the 1099R worksheet and the IRA worksheet for each return and compare the one that works to the other ones? Maybe you’ll see a difference?

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

U

UBBullAuthor

Level 2

This did the trick! Thank you for the suggestion. I had to uncheck the box on the 1099-R worksheet in the Inherited IRA section--that was the only way to generate the Form 8606 and apply the basis from the nondeductible contributions by grandpa.

qbteachmt

Level 15

“Nobody has their own traditional IRA”

Not only are inherited IRAs not aggregated with other IRA account types, they are not even aggregated to each other unless inherited from the same original owner.

Don't yell at us; we're volunteers

rbynaker

Level 13

I haven’t looked lately but at one point there was a hard limit of 2 on 8606 forms for efiling. So if TP & SP both have IRAs with basis there is no mechanism to create a 3rd 8606 for an Inherited IRA with basis. I’m guessing that’s why the OP mentioned that they don’t have their own IRAs. I think even with a single TP it might cough up a hairball if you try to enter two 8606 forms both coded as TP. The IRS will need to fix this soon as we start seeing more inherited IRAs with basis. Seemingly that’s not the problem in this case.

That said, it shouldn’t be a problem for kids without their own IRAs to use an 8606. I’d follow Lisa’s advice and look side-by-side for differences. First place I’d look is to make sure the IRA box is checked on the 1099-R and make sure you’re using Code 4. Then there may be some useful boxes in the “scroll down” of the 1099-R Wks. They hide a LOT of useful stuff in there to cover odd situations.

Rick

U

UBBullAuthor

Level 2

Rick, you got it! I have another client who had basis in her IRA and inherited an IRA with basis; her spouse has basis too. That’s my next one to tackle 😜

Are there six separate inherited IRA accounts, one for each beneficiary? Did you pro-rate the cost basis among all of them?

Sign up

Login with SSO

Let's get you signed in

Login with SSO