Author Topic: Form 8086 - Part 1 requirements  (Read 279 times)

FrugalHeights

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Form 8086 - Part 1 requirements
« on: December 27, 2018, 04:49:54 PM »
Hi all,

First, I have tried to find an answer on this forum, online, and by calling IRS (government shut down unfortunately) and Vanguard. I was not able to find an answer. If I missed it, please point me in the right direction. Thank you!!

My case:
In years 2015, 2016, and 2017 I contributed to tIRA. All money are nondeductable and are eligible for Roth Conversion. For simple numbers, total is $10k ($9k basis + $1k gains).
In 2018, I did not contribute to tIRA, but I contributed to Roth IRA (fully).
I would like to convert ALL $10k in tIRA to Roth this year (2 days left..) and I know that I will have to pay tax on the gain.

I also know that I need to fill out Form 8086.
When I look at Form 8086 Part 1, it says:
"Complete this part only if one or more of the following apply.
You made nondeductible contributions to a traditional IRA for 2018.
You took distributions from a traditional, SEP, or SIMPLE IRA in 2018 and you made nondeductible contributions to a
traditional IRA in 2018 or an earlier year. For this purpose, a distribution does not include a rollover (other than a
repayment of a qualified 2017 disaster distribution (see 2018 Forms 8915A and 8915B)), qualified charitable distribution, onetime distribution to fund an HSA, conversion, recharacterization, or return of certain contributions.
You converted part, but not all, of your traditional, SEP, and SIMPLE IRAs to Roth IRAs in 2018 (excluding any portion
you recharacterized) and you made nondeductible contributions to a traditional IRA in 2018 or an earlier year."


None of the bullet points apply to me if I want to covert all tIRA money to Roth.
Does anyone know what to do? Has anyone been in the same situation?

Can I convert all tIRA to Roth IRA this year?
If yes, how to fill out Form 8086 if Part 1 does not apply to me?
If no, is it because I did not contribute to tIRA this year?

Again, thanks a lot for any ideas!

bacchi

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Re: Form 8086 - Part 1 requirements
« Reply #1 on: December 27, 2018, 09:45:51 PM »
It's form 8606, not an intel chip. :)

Part 1 is used to figure out your pro-rata nondeductible/deductible portions. Just continue to part II if it's all nondeductible.

"Otherwise, enter the net amount you converted from traditional, ..."

Then on the next line, enter your basis:

"Otherwise, enter your basis in the amount on line 16 (see instructions)"


FrugalHeights

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Re: Form 8086 - Part 1 requirements
« Reply #2 on: December 27, 2018, 10:00:14 PM »
Thanks a lot!
OMG, I get it now.
Looks like my case is the simplest of all: I need to complete only Part 2, i.e., only three lines.

Live long and prosper MMM forum! Y

MDM

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Re: Form 8086 - Part 1 requirements
« Reply #3 on: December 28, 2018, 10:14:30 PM »
You might try putting your situation for all four years into the 'Form8606' tab of the case study spreadsheet.

Do the yearly numbers make sense?

FrugalHeights

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Re: Form 8086 - Part 1 requirements
« Reply #4 on: December 29, 2018, 09:15:22 AM »
Thank you for the link and the suggestion. I have not used/seen this spreadsheet before, and it looks impressive.
I will play with it and report back.

Side question: have you made this spreadsheet in Google Sheets? I tried to make a shared spreadsheet for my work (not finance related), but could not figure out how to allow other users to modify only certain cells (either for inputs or as a dropdown menu). It was all or nothing (either they could modify all cells or none). Maybe the problem was that I had dropdowns. Apologies for going off topic here.

THANKS A LOT FOR THIS SPREADSHEET!

MDM

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Re: Form 8086 - Part 1 requirements
« Reply #5 on: December 29, 2018, 10:36:22 AM »
Thank you for the link and the suggestion. I have not used/seen this spreadsheet before, and it looks impressive.
I will play with it and report back.

Side question: have you made this spreadsheet in Google Sheets? I tried to make a shared spreadsheet for my work (not finance related), but could not figure out how to allow other users to modify only certain cells (either for inputs or as a dropdown menu). It was all or nothing (either they could modify all cells or none). Maybe the problem was that I had dropdowns. Apologies for going off topic here.

THANKS A LOT FOR THIS SPREADSHEET!
It seems Excel is just better than Sheets.  At least, that's what the lack of response to Any Google Sheets knowledge? suggests....