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Entering IRA basis and year-end value

by Intuit Updated 1 month ago

When there's a 1099-R for an IRA entered into the tax return, the taxable amount of the distribution is calculated on From 8606 but the basis needs to be entered for the calculation to be correct.

Entering the IRA basis:

  1. Press F6 to open the list of all forms.
  2. Type in "IRA I" to highlight the IRA Info Wks.
  3. Press Enter.
  4. Enter any traditional basis in Part III for the taxpayer or spouse.
  5. Enter traditional IRA year-end values in Part IV for the taxpayer and spouse.

If you've made nondeductible contributions or rolled over any after-tax amounts to any of your traditional IRAs, you have a cost basis (investment in the contract) equal to the amount of those contributions. These nondeductible contributions aren't taxed when they're distributed to you. They are a return of your investment in your IRA. Only the part of the distribution that represents nondeductible contributions and rolled over after-tax amounts (your cost basis) is tax-free.

Form 8606 is used to calculate the taxable portion (if any) of the IRA distribution. If you have basis in your IRA, the program will automatically keep track of—and transfer from year-to-year—any nondeductible contributions entered in the return. You can view the Form 8606 to see the calculation.

For more information about deductible and nondeductible IRAs, as well as taxable and nontaxable distributions, refer to IRS Pub. 590-A.

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