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Author: mbs2304 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121185  
Subject: Nondeductible IRA Contributions Date: 2/13/2000 4:02 PM
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Okay, pmarti. Maybe you can answer this one for me as well. In August 1997, I funded my traditional IRA with $2,000.00. In January 1998, I rolled that traditional IRA (with assets then only worth approx. $1,924.87) into a Roth IRA. In November 1998, I funded my Roth IRA with an additional $2,000.00. I had a tax preparer prepare my tax returns for the 1998 tax year. I gave to her my statement for my Roth IRA. In that statement, the line entitled "Rollover Deposits" for the tax year 1998 totalled $1,939.83. The line entitled "IRA contributions you wish to record as non-deductible (life-to-date) totalled $2,000.00. The tax preparer included the $1,939,83 on Form 8606 entitled "Enter the total amount of distributions from traditional IRAs during 1998 that were converted to Roth IRAs." However, she did not include the $2,000.00 that was initially put into the traditional IRA (in August 1997) as my BASIS. Should she have done so? After all, I thought I read recently that you need only pay taxes on your EARNINGS from funds which were converted from a traditional IRA to a Roth-- and not the amount you put in initially. Is this right? If so, it seems that I should not have paid taxes at all on this conversion. If that is the case, how do I get that money back from the IRS that I overpaid to them last year? I thank you in advance for your help.
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