Wednesday, January 19, 2011

Form 8606 for 2010 Roth Conversions

If you did a Roth conversion in 2010, you will need to file Form 8606 with your 2010 tax return. There is no escaping this unless you do a total recharacterization of your Roth conversion.

Part II of the form deals with conversions from IRAs and Part III of the form deals with conversions from plans and in-plan Roth conversions. If there is anyone out there who did both a conversion from a Plan to a Roth and an in-plan conversion, you will have to file two copies of Form 8606 since you will report them separately in Part III. Married couples where both spouses did Roth conversions will also have to file two copies of the form since it is an individual, not a joint, form.

The form treats all conversions as one conversion and all IRAs as one IRA. An election made for one Roth conversion will have to be the same election made for conversions of that individual. In addition, the election you make for paying taxes on IRA conversions to a Roth IRA will have to be the same election you make for your plan conversions to a Roth IRA. Spouses, however, can make different tax elections since the form is filed by the individual.

Those who are taking the default provision and are spreading the income over 2011 and 2012 will report the amount of income to be included on the returns for those years on lines 20 a and b in Part II and on lines 25 a and b in Part III. This is how IRS can check your math and how they will know how much you will be adding to your income for those years.

You can find Form 8606 and its instructions on the IRS website, On the left hand side of the screen, click on Forms and Publications.

By IRA Technical Consultant Beverly DeVeny and Jared Trexler
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*Copyright 2011 Ed Slott and Company, LLC


Peter said...

You mention having to file 2 8606's. I need to do that for a different reason. I have an inherited IRA (with non-deductible contributions) as well as a personal IRA. I need to file an 8606 for each. But neither TurboTax nor H&R Block software support 2 8606's for a single individual. Can I efile my return with the 8606 for my personal IRA and then simply mail the IRS a copy of the 8606 for the inherited IRA?