Calculating Basis of Conversion for Roth IRA - totally lost on my taxes

Thanks for explaining, but I'm still confused. I don't think I've ever filed a Form 8606 before? Would that form have been included in my tax returns even if I used tax software? I've been using TurboTax for years. Also, what happens if I can't find my past tax returns from 8 years ago? Is there some way I can estimate this or get the information from the IRS?

If you used tax software, Form 8606 would have been generated and filed if you indicated you made non-deductible contributions. You can check your past returns - it would be included with your complete tax return if it was filed. If you can't find past returns, you can request transcripts from the IRS using the Get Transcript service on IRS.gov or Form 4506-T. However, these might not show all the details you need. You could also check your account statements from your traditional IRA to see your contribution history, though these won't specifically identify which contributions were deductible versus non-deductible.

How does taxr.ai handle situations where you don't have all your past documents? I'm interested but I'm missing statements from a couple years when I was between jobs and moved twice.

Does it actually connect to the IRS to verify information or is it just analyzing what you give it? Because if I'm already unsure about my contribution history, I don't see how uploading my incomplete records would help.

It doesn't require absolutely all documents - it can work with what you have and help you estimate the missing pieces based on your income levels and contribution patterns from the years you do have records for. The tool provides confidence levels for its calculations, so you know which numbers are definite versus probable. The system doesn't directly connect to the IRS, but it can analyze tax transcripts if you provide them. What made it helpful for me was that it examined my income levels from each year to determine whether I would have been eligible to deduct contributions, then factored that into the basis calculations. It basically helped me reconstruct what should have happened even though my record-keeping was spotty.

How does this actually work? Do they just call the IRS for you or something? I'm confused how a third party service can get you through to the IRS faster than calling yourself.

Yeah right. The IRS never answers their phones for anyone. This sounds like a scam to get your personal info. No way some random service can magically get the IRS to call you when they ignore their own phone lines.

They don't call the IRS for you - they use a system that navigates the IRS phone tree and holds your place in line. When they reach a live person, you get a call connecting you directly to that IRS agent. You're the one who speaks with the IRS, not them. The reason it works is because they have technology that can stay on hold 24/7, which most people can't do themselves. They're just getting you a spot in the queue without you having to personally wait on hold for hours. The IRS is actually answering their phones - the problem is the incredible wait times that most people can't manage.

What happens if you guess wrong though? Is this something the IRS flags regularly or do they usually not care about the basis as long as you're reporting the conversion itself?

The IRS definitely cares about basis - getting it wrong means either overpaying taxes (if you understate your basis) or potentially facing penalties and interest (if you overstate it). In my experience, they don't automatically flag it, but if you're audited, this would absolutely be reviewed. Making a good faith effort with documentation to support your calculations is your best protection. If you're uncertain, it's better to be conservative and report a lower basis than you think you might have, to avoid underpaying taxes.

I tried that route first. The transcript shows that Form 8606 was filed but doesn't give you the detailed line items like your non-deductible contribution amounts. It's helpful to confirm if you filed the form, but you still need the actual forms to see the specific numbers.

This seems like terrible advice if the person has a large IRA balance. You could end up paying tens of thousands in unnecessary taxes! Plus dumping a large conversion into a single tax year could push you into a higher bracket.

You're right that it's not for everyone - should have been clearer about that. It makes sense mainly for smaller balances where the potential overtaxation is less than the hassle of reconstructing years of missing records. For larger balances, it's definitely worth putting in the time to get the basis right. I should have mentioned that doing partial conversions over several years can also help manage the tax impact by spreading it across multiple tax brackets.