Form 8606 Line 2 - How to Enter Total Basis in Traditional IRAs with Nondeductible Contributions?
I've been making nondeductible contributions to a traditional IRA for several years now. This particular account ONLY contains nondeductible contributions, nothing else. I'm working on Form 8606 and I'm stuck on Line 2 where it asks to "Enter your total basis in traditional IRAs." Would I be correct in just using the Cost Basis amount shown on my December 31st brokerage statement? Honestly I'm trying to avoid the massive headache of hunting down statements from every single year to verify each contribution. Really hoping there's a simpler solution here. Has anyone dealt with this before?
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Paolo Marino
You need to be careful with this one. The "total basis" on Line 2 of Form 8606 specifically refers to the sum of all nondeductible contributions you've made to ALL traditional IRAs minus any previous distributions of those nondeductible amounts. The Cost Basis shown on your brokerage statement might not accurately reflect this amount. It could include investment gains/losses which aren't part of your basis calculation for Form 8606 purposes. Ideally, you should have filed Form 8606 for each year you made nondeductible contributions, and those previous forms would show your running basis. If you didn't file in previous years, you'll need to recreate that history.
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StardustSeeker
•Thanks for the response! So if I understand correctly, the Cost Basis on my statement isn't the right number to use? I'm pretty sure I filed Form 8606 each year I made contributions, but I don't have copies of those forms. Is there another way to find my cumulative basis without digging through years of records?
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Paolo Marino
•The Cost Basis on your statement isn't the correct number, as it may include market value changes which don't affect your nondeductible contribution basis for IRS purposes. If you filed Form 8606 each year as required, you can request transcripts from the IRS that would show your previously reported information. You can get these online through the IRS website or by filing Form 4506-T. The last Form 8606 you filed should have your cumulative basis on Line 14, which would become Line 2 on your current year's form.
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Amina Bah
I went through exactly this headache last year with tracking my nondeductible IRA contributions. I found an amazing tool that saved me hours of work - https://taxr.ai actually helped me analyze all my documents and tracked my basis automatically. I uploaded my previous tax returns and investment statements, and it pulled out all my nondeductible contributions history. It even found a contribution I had completely forgotten about from 2019! The tool calculated my correct basis for Form 8606 line 2 and showed exactly how they got to that number.
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Oliver Becker
•How accurate is this tool really? I've got a similar situation but with multiple IRAs and rollovers over the years. Can it handle complex situations or just basic contributions?
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Natasha Petrova
•Did you have to upload ALL your tax returns? I'm missing a few years of documentation and wondering if this would still work for me.
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Amina Bah
•It's surprisingly accurate - it extracts the exact amounts from your documents and does all the math correctly. In my experience, it worked perfectly with my situation which included multiple rollovers between accounts. As for missing returns, you don't need absolutely everything. It works with whatever documents you have, and for the missing years, you can input estimates if needed. What was helpful was that it showed me exactly what was missing and where to focus my efforts to find documentation.
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Oliver Becker
Just wanted to update about my experience with taxr.ai after checking it out. I was skeptical about trusting a tool with my complex IRA situation, but wow - it actually worked amazingly well. I've been stressing about my Form 8606 for weeks. I had multiple traditional IRAs with both deductible and nondeductible contributions plus a rollover from an old 401k. The tool analyzed everything and broke down exactly what my basis was for Line 2. It even explained which contributions were already accounted for in previous years' forms. Saved me from making a $4,200 mistake on my taxes this year!
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Javier Hernandez
If you're having trouble getting through to the IRS to get your past records (which they absolutely have), try using https://claimyr.com - it literally got me through to an actual IRS agent in about 20 minutes after I'd spent DAYS trying to call them myself. You can see how it works here: https://youtu.be/_kiP6q8DX5c I needed my past 8606 forms to figure out my basis and was getting nowhere with the automated system. The IRS agent I spoke with pulled up my previous filings and confirmed my total nondeductible contribution history so I could complete this year's form correctly.
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Emma Davis
•How does this actually work? I've tried calling the IRS dozens of times and always get the "call back later" message. Are you saying this service somehow gets you past that?
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LunarLegend
•Sounds like BS honestly. The IRS phone system is designed to keep people out. No way some service can magically get you through when millions of people can't reach them.
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Javier Hernandez
•It's actually pretty straightforward - they use an automated system that continually redials and navigates the IRS phone tree until it finds an opening, then it calls you and connects you directly to the agent. It's not magic, just technology that handles the frustrating part. For those who are skeptical, I understand completely. I didn't believe it would work either, but when you've spent hours trying to reach someone with no success, it's worth a shot. The service doesn't bypass any official channels - it just handles the redialing part that most of us don't have the patience for.
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LunarLegend
I have to eat my words about Claimyr. After posting that skeptical comment, I was desperate enough to try it because I absolutely needed my past 8606 info. Got connected to an IRS rep in about 35 minutes (they said wait time might vary). The agent was super helpful and pulled up my past three years of filings which had all my nondeductible contribution history. Turns out I'd been calculating my basis incorrectly for years and would have made another mistake this year without this info. Never been so happy to be wrong about something!
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Malik Jackson
Just to add something that might help - if you're unsure about your basis and don't have all the records, you might want to consider a Roth conversion strategy going forward. Converting your traditional IRA with nondeductible contributions to a Roth can potentially simplify your tax situation in future years. Since you've already paid tax on the nondeductible contributions, you'd only owe tax on any earnings during the conversion. And if your traditional IRA only has nondeductible contributions as you mentioned, the tax impact might be minimal.
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StardustSeeker
•That's an interesting idea. Would I still need to figure out my correct basis on Form 8606 even if I'm planning to do a Roth conversion? Or does converting simplify the paperwork somehow?
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Malik Jackson
•Yes, you still need to accurately complete Form 8606 even for a Roth conversion. The form is actually essential because it establishes your nondeductible basis, which determines how much of the conversion will be taxable. Without the correct basis documented on Form 8606, you risk being taxed again on money you've already paid tax on. The conversion doesn't eliminate the paperwork, but it can simplify your future tax situation since Roth distributions are generally tax-free.
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Isabella Oliveira
Does anyone know if keeping a spreadsheet of your contributions is acceptable as proof if you get audited? I've been tracking mine carefully but don't have all the original contribution receipts.
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Ravi Patel
•I asked my CPA about this last year. She said a spreadsheet is a good start, but you should also keep copies of account statements showing the contributions if possible. The IRS generally wants to see some form of third-party verification, not just your own records.
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Connor Richards
I went through this exact same situation a few years ago and learned some hard lessons. The key thing to understand is that your basis for Form 8606 Line 2 is NOT the same as the cost basis on your brokerage statement. Your brokerage's cost basis includes market fluctuations and investment gains/losses, while the IRS basis is purely the sum of your nondeductible contributions. Here's what I'd recommend: Start by checking if you have any old tax returns saved electronically. If you filed Form 8606 in previous years, Line 14 from your most recent filing should show your cumulative basis - that number rolls forward to become Line 2 on this year's form. If you can't find your old returns, the IRS transcript route mentioned earlier is your best bet. You can get them free online at irs.gov or by calling. The transcripts will show your previously reported nondeductible contributions. One more tip: Keep meticulous records going forward! I now keep a simple spreadsheet with contribution dates, amounts, and form references. It's saved me hours during tax season.
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Sean Fitzgerald
•This is exactly the kind of practical advice I was hoping for! I think I may have been overthinking this whole thing. Let me check if I have any old tax returns saved on my computer first before going the IRS transcript route. Quick question - when you say Line 14 from the most recent Form 8606 becomes Line 2 on the current year's form, does that number get adjusted at all, or is it literally just copied over as-is? I want to make sure I understand the process correctly before I start filling anything out. Your spreadsheet idea is brilliant too. Definitely implementing that going forward to avoid this headache next year!
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