Originally Posted by kbrisson
My wife and I both made $5500 non-deductible contributions to brand new Trad. IRA accounts in 2014 for year 2013. We converted these to ROTH IRA's. I neglected/didn't realize I needed to complete f8606 and am now trying to do that. Two questions:
1) f8606 question on Line 3 is throwing me: "In 2013, ... make a ROTH IRA conversion. Since technically I made the conversion in 2014, do I note that on next years filing? Or should I be reporting the conversion on 2013 form.
2) I understand there is a $50 penalty for filing f8606 late. Is this penalty per filing or per form (i.e. penalty for not filing mine AND my wife's 8606). And should I send that payment in immediately with the form?
1) f8606 question on Line 3 is throwing me: "In 2013, ... make a ROTH IRA conversion. Since technically I made the conversion in 2014, do I note that on next years filing? Or should I be reporting the conversion on 2013 form.==============>>>>>>>>>>>>>> Basically, when converting to your Roth, you need to understand the deadlines and rules for converting to a Roth; in general, your R-IRA conversion must take place by Dec. 31 of the tax year you are transferring your traditional IRA in in order to have the conversion be counted in that tax year. If you miss the deadline of Dec. 31, the conversion will be considered as a transfer for the following year. When you elect to have your R-IRA transferred directly from one custodian to another, with no other involvement on your part, there is no deadline for the transfer other than the Dec. 31 deadline for income tax purposes. Tso, te shortest answer is that, for any given year, the deadline for a R-IRA conversion is Dec 31 of that year. This is different from IRA contributions, which can be made up until April 15 of the following year.
2) I understand there is a $50 penalty for filing f8606 late. Is this penalty per filing or per form (i.e. penalty for not filing mine AND my wife's 8606). And should I send that payment in immediately with the form?=========>>>>>>>>>>>>>> If you do not report nondeductible contributions, all of the contributions to your trad. IRA will be treated as deductible. All distributions from your IRA will be taxed unless you can show, with satisfactory evidence, that nondeductible contributions were made. The penalty for filing Form 8606 late is $50 per form. However, the IRS sometimes waives this penalty if you can show reasonable cause for why the forms are filed late. Although Form 8606 is normally submitted with a timely filed Form 1040, the IRS will process a late-filed Form 8606 (even one that is filed after the normal three-year statute of limitations for claiming a refund has expired). The Form 8606 can be submitted without a Form 1040 or Form 1040X. The Form 8606 has a signature line and you can send it in as a stand alone form with your penalty(you can check it with the iRS)You should file Form 8606 to report your basis in a non-deductible ira. You need to file Form 8606 for each year that you made non-deductible contributions. This will establish your basis in the IRA. You would then be eligible either to convert your non-deductible IRAs into Roth IRAs, or you could begin taking distributions from the non-deductible IRAs.Since no 8606 form was filed in 2014 then that conversion and election has never been reported and that election to defer the tax does not exist, since it was never made.