File Missing Tax Form 8606 for IRA Conversion?

[Southern Geek]

Looking through the return I filed early this year for tax year 2016, I discovered that Form 8606 was not filed with return that showed an amount that I converted from a Rollover IRA to a Roth. The Rollover IRA has no after tax $ so entire conversion was taxable. The converted amount was included on Line 15A of 1040, and tax was paid. I have documentation from financial institution showing $ transferred from Rollover IRA to Roth IRA. I was older than 59.5 during tax year so no penalty ramifications.
From what I can read, it doesn't seem that filing an amended return just to include the missing Form 8606 serves any purpose. Is there a consequence of not filing the 8606 that I've not considered?

 

[SecondCor521]

You may need numbers from the 8606 when you do something in the future that requires filing another 8606. I believe there are places where carryovers happen on that form.

If I were you, I would fill out the 8606 for 2016 and put it in with my other tax records for that year with a note that it wasn't actually filed. That way, if it is five years from now, you won't have to try to reconstruct what happened in 2016 when your recollection may be hazier. (No judgment, my recollection of what I did this morning is hazy.)

 

[sengsational]

I agree. Create the 8606.

A long while back, I had 8606's ever year. Then there was a long spell where I didn't need to file them. But when it was time to file one again, it was a real head scratcher.

What I did at that time was create a spreadsheet with one row per 8606. Luckily, I had all my tax returns since "forever" to go back and look at. But it did mean a trip to the attic. Now I have that spreadsheet that shows the basis of the IRA's, and what I reported each time I filed one. The IRS probably would probably "know" if your current 8606 was out of whack with the last one, but I doubt they'd do anything if the discrepancy had you at a disadvantage.

 

[LOL!]

I sent in a Form 8606 for year 2004, but only in 2015. I attached a hand-written note with something like "I forgot to send this in with my 2004 tax return, so here it is now." I made Roth conversions in 2016 and 2017 that needed that 2004 Form 8606 to get the numbers right. I sent in no separate documentation that the 2004 Form 8606 was correct.

So far, not a peep from the IRS.

I recommend sending in a Form 8606 without amending your Form 1040.

 

[kaneohe]

Do you have any other TIRAs that have after-tax basis in them? If not then your 8606 seems to have little purpose other than declaring a Roth conversion.
I assume you included the converted amount also on line 15b of the 1040.
At this point IRS would only know that you made a TIRA withdrawal but the tax consequences of that are the same as a Roth conversion so no tax consequences.

Since you are over 59.5y.o. , you would be able to withdraw any Roth conversions/contributions at any time w/o penalty......the 5498 that you should have received in May this yr should show the conversion amount in box 3?
That would show that you could withdraw that amount w/o penalty because it is not earnings which might be taxed if oldest Roth is not 5 yrs old.

Guessing you should be ok w/o submitting it but how much work is it to fill out 2 lines on F8608 w/ the same number? I've heard that IRS doesn't like you to file amended returns if the difference is not much but this is just a standalone form and not an amended return.

Probably not a compelling reason to do it but no harm either in filing that form.

 

[Southern Geek]

Do you have any other TIRAs that have after-tax basis in them?

No.

If not then your 8606 seems to have little purpose other than declaring a Roth conversion.

That's the way I see it. The Rollover IRA has no basis and the Roth IRA is funded entirely via conversions from the Rollover. My understanding is that the Form 8606 is to track basis in IRAs in the event that a withdrawal is made from an IRA before it is fully qualified. Once a Roth is fully qualified, the purpose of the 8606 appears to be moot, and redundant to the 5498.

I assume you included the converted amount also on line 15b of the 1040.

Yes.

At this point IRS would only know that you made a TIRA withdrawal but the tax consequences of that are the same as a Roth conversion so no tax consequences.

Since you are over 59.5y.o. , you would be able to withdraw any Roth conversions/contributions at any time w/o penalty......the 5498 that you should have received in May this yr should show the conversion amount in box 3?

Yes.

That would show that you could withdraw that amount w/o penalty because it is not earnings which might be taxed if oldest Roth is not 5 yrs old.

Guessing you should be ok w/o submitting it but how much work is it to fill out 2 lines on F8608 w/ the same number? I've heard that IRS doesn't like you to file amended returns if the difference is not much but this is just a standalone form and not an amended return.

Probably not a compelling reason to do it but no harm either in filing that form.

Now I know I could file a standalone 8606, but I think I'll just leave as is.