Message Font: Serif | Sans-Serif
No. of Recommendations: 2
we are only talking about approximately $2,600 on the conversion. i calculated my basis (by adding all of my unintentional non-deductible contributions over the years) at approximatley $2,500. as such, it is my understanding that my taxable conversion amount is approximately $100 and this should be reflected in Part II of form 8606 (this was a TOTAL conversion).

who is correct? the h&r block agent or me? if the h&r agent is correct, then i would be paying taxes on my contributions TWICE! i can't imagine the irs endorsing people paying taxes twice in such a scenario just because deductions were not taken on the contributions previously.

once again, i would appreciate any comments, advice or suggestions. this is the only thing that is holding up my 2000 year returns. this is becoming very worrisome.

Well, everyone's kinda correct and kinda not. The Block preparer is correct that you establish your previously-taxed basis in your traditional IRA by filing Form 8606. I can well understand why a paid preparer, who is liable for penalties for an improper return, would not prepare the return the way you want it prepared.

I'm not sure anyone knows how picky IRS is about this rule. If you have a record of all your contributions and copies of your returns showing you never deducted the contributions, I'd say go ahead and treat them as nondeductible contributions, resulting in the Form 8606 that you propose. It may not be right, and it might not stand up under an audit, but I think it's worth a shot. It's certainly not fraudulent or a flagrant disregard for the rules.

Phil Marti
VITA Volunteer
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.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
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.