Message Font: Serif | Sans-Serif
No. of Recommendations: 1
<<<< When I converted my traditional IRA to Roth IRA at the end of 1998, I was under the impression that this was a non-taxed recharacterization and, accordingly, did not pay taxes on it. I now realize that I was supposed to pay, but I'm not sure how to handle the situation now. I'm assuming there's some form I can fill out and submit with my 1999 taxes. >>

No, you can't fix it on the 1999 return. You have to amend your 1998 return. You'll need Form 1040X and Form 8606 to report the conversion. The 4-year spread will apply. Send the 1040X with the additional tax. IRS will bill you for the interest.>>

Just to amplify on what Phil has to say. As usual, he's right on. But there is still some confusion regarding the 4 year spread.

The 4 year spread election must made on Form 8606 on a timely filed return. If no election is made, the four-year rule will be deemed to be elected. An election, or deemed election, cannot be changed after the due date for the return for the first year of the income inclusion (including extensions).

So, now, even if you WANT to report the entire conversion income all in 1998, I believe that you are barred from doing so. Since your election was not made on Form 8606 on a timely filed return, you are now stuck with the 4 year it or not.

TMF Taxes
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.