Filing Form 8606 for prior years (was not filed last 3 years)

[bmaniara92]

Hello. I'm hoping someone can help me figure out how to file Form 8606 properly for the past several years. My dad has been filing my taxes using ProSeries but was not aware of Form 8606. So from 2018 through 2020 (years when I made non-deductible traditional IRA contributions), Form 8606 was never filed. I was finally able to access an old Acorns account to figure out how much I contributed during each of those years to my traditional IRA, and I confirmed those values with Form 5498 for each of those years. In total, I had about $7,600 in non-deductible traditional IRA contributions during those years, so I assume that will be my basis on Line 2 for my 2021 Form 8606.

I have a few questions regarding filing Form 8606 for 2018-2020:

1. Do I need to fill out both Form 8606 and 1040-X for each of those years? The IRA contributions were never deducted on those prior tax returns (I double checked with the prior Form 1040 for each year), so I don't know if I need to fill out Form 1040-X.
2. Do I need to mail Form 8606 for each year in separate envelopes or all in one envelope? Should it be in certified mail?
3. Is there a way to demonstrate reasonable cause to avoid the $50 penalty for each of those years?

Thanks in advance for your help!

[spiritrider]

1. Since there is no change to any tax calculation. You only need to file Form 8606. Only in rare occasions will some bored agent request you file a Form 1040-X.
2. You can send them all in one envelope. It will actually make it easier for the IRS. Just make sure you use the appropriate Form 8606 for each year.
3. Do not send any payments and/or raise reasonable cause. I am unaware of any case where the IRS assessed the $50 penalty when filing late Form 8606s. Only in the extremely unlikely event they assess it should you ever raise reasonable cause.

I'm glad that you found the necessary documentation to correct this

I don't mean to sound harsh, but if your dad has has done taxes for other people, especially if he is a paid preparer. How many other returns have been filed without required Form 8606s? Even worse, how many people have paid unnecessary Roth conversions taxes on non-deductible basis?

[bmaniara92]

1. Since there is no change to any tax calculation. You only need to file Form 8606. Only in rare occasions will some bored agent request you file a Form 1040-X.
2. You can send them all in one envelope. It will actually make it easier for the IRS. Just make sure you use the appropriate Form 8606 for each year.
3. Do not send any payments and/or raise reasonable cause. I am unaware of any case where the IRS assessed the $50 penalty when filing late Form 8606s. Only in the extremely unlikely event they assess it should you ever raise reasonable cause.

I'm glad that you found the necessary documentation to correct this

I don't mean to sound harsh, but if your dad has has done taxes for other people, especially if he is a paid preparer. How many other returns have been filed without required Form 8606s? Even worse, how many people have paid unnecessary Roth conversions taxes on non-deductible basis?

Thank you so much for your help! In the envelope, should I provide a cover letter to apologize for not filing in the past and to let them know what the form is for, or is sending the form in the envelope alone sufficient?

As for the concern, my dad has only filed for family, and my brother and I have been the only ones to ever have non-deductible contributions, so it fortunately shouldn't have affected anyone else.

[Tim]

Don’t be harsh on Dad.
”Background on the Backdoor
The backdoor Roth IRA was born in 2010, when Congress lifted the $100,000 income limit that had previously been in place for IRA conversions. That change enabled investors who earned too much to contribute to a Roth IRA directly to contribute to a traditional IRA (where income limits don't apply so long as you don't deduct the contribution), then convert to a Roth after that. Voila, "backdoor" Roth IRA contributions! “

[spiritrider]

Thank you so much for your help! In the envelope, should I provide a cover letter to apologize for not filing in the past and to let them know what the form is for, or is sending the form in the envelope alone sufficient?

Just provide the forms, the IRS will know what to do with them. A general rule when dealing with the IRS. Don't provide more information than necessary.

[spiritrider]

Don’t be harsh on Dad.

I wasn't trying to be too harsh on Dad. However, as pointed out by jfoxcpacfp in the other thread. My concern was that ProSeries is usually only used by professional tax preparers.

[Tim]

I wasn't trying to be too harsh on Dad. However, as pointed out by jfoxcpacfp in the other thread. My concern was that ProSeries is usually only used by professional tax preparers.

Not directed at you by any means, just to OP.
Step Doctrine was debated until 2018.
”But with the Tax Cuts and Jobs Act signed by President Trump in 2017, the backdoor Roth IRA is now considered legal by Congress.”.
Impressive that “Dad” would use the ProSeries without doing taxes other than family.

I would point out that OP and his brother need to learn how to do taxes. It’s not the money. I am sure Dad would review and appreciate someone doing some chores. Much more motivation for providing a hobby rather than the data entry stuff.
Ask me how I know?

[bmaniara92]

Not directed at you by any means, just to OP.
Step Doctrine was debated until 2018.
”But with the Tax Cuts and Jobs Act signed by President Trump in 2017, the backdoor Roth IRA is now considered legal by Congress.”.
Impressive that “Dad” would use the ProSeries without doing taxes other than family.

I would point out that OP and his brother need to learn how to do taxes. It’s not the money. I am sure Dad would review and appreciate someone doing some chores. Much more motivation for providing a hobby rather than the data entry stuff.
Ask me how I know?

Haha, how do you know? I appreciate all the insight that you and everyone else here has provided me with. I would not be harsh on him because I know how hard he's worked to provide our family with a living, and I know the commenter was not intending to be harsh. I appreciate the help.

Do you have any recommendations on how I can learn to do taxes? My dad took a course in the 1990s. Is there a free and efficient way to learn this other than browsing through Google and YouTube?

Thanks again!

[Tim]

Start with your return.
Read every form and if needed the instructions as well. Turbo Tax uses and interview process. The result is they also give you the option of reviewing all potential deductions. The advantage is your taxes are dependent on income and deductions, not trying to learn the whole enchilada. Focus your education on what applies to you. Form 1040 refers you to the supporting schedules and how to fill each out. Check out Schedule A, itemized deductions as well.

• https://apps.irs.gov/app/vita/conten...deductions.pdf
• If you sold a capital asset, such as a stock or bond, you must complete and attach Form 8949 and Schedule D.

https://www.irs.gov/instructions/i1040gi
You will find a huge library, cut your education to what applies to you.
You found out about 8606, look at the instructions. It seems like a huge task. Not really once you get organized and through it the first time.

[bmaniara92]

Start with your return.
Read every form and if needed the instructions as well. Turbo Tax uses and interview process. The result is they also give you the option of reviewing all potential deductions. The advantage is your taxes are dependent on income and deductions, not trying to learn the whole enchilada. Focus your education on what applies to you. Form 1040 refers you to the supporting schedules and how to fill each out. Check out Schedule A, itemized deductions as well.

• https://apps.irs.gov/app/vita/conten...deductions.pdf
• If you sold a capital asset, such as a stock or bond, you must complete and attach Form 8949 and Schedule D.

https://www.irs.gov/instructions/i1040gi
You will find a huge library, cut your education to what applies to you.
You found out about 8606, look at the instructions. It seems like a huge task. Not really once you get organized and through it the first time.

Thank you! I will look into these.