Attaching a statement to tax return

[laughing_paddler]

Greetings,

Question: For those of you who use commercially available tax preparation software to e-file, do any or all of them allow you to attach a statement to the return?

Background: I've been using FreeFileFillableForms for at least 4 years now and ran into a problem this year with needing to "attach a statement" describing the TradIRA to RothIRA recharacterizations I did in 2019 for 2018 (as well as the ones I'm doing for 2019 in 2020). It turns out that I won't be able to e-file because the system doesn't allow me to attach a statement to an e-filed return.

So it appears I'm forced to choose between mail-filing my federal return or finding software that can e-file with a statement.

Can anyone offer information on this? I'm filing quite a few (for me) forms and schedules this year (4 schedules, 2 forms) so I suspect I won't want to pay all the extra costs associated with them, but some of you may know better.

Thanks!

Recharacterization instructions for 8606:
https://www.irs.gov/instructions/i8606#idm140149370941632

Limitations for FreeFileFillableForms:
https://www.irs.gov/e-file-providers/list-of-available-free-file-fillable-forms

[terran]

I've had to attach a statement for IRA recharacterization a number of times. I was using a tax preparer the first time, so that was fine. I was using taxact another time and that was fine. Most recently I used Free Fillable Forms, so I had to mail it it. That was also fine, but I had to pay postage and go to the post office. I would probably continue to use Free Fillable Forms and mail it in if I had to attach a statement, but if I really wanted to efile I'd probably look in to whether FreeTaxUSA would allow it. 

Edit: here's the statement I attach

[Taxpayer or Spouse] [taxpayer or spouse's name] contributed $[contribution amount] to a [Roth or traditional] IRA on [contribution date] for the [2019] contribution year. On [recharacterization date] [all] $[portion of the contribution recharacterized] of the contribution was recharacterized by transferring $[amount actually moved] to a [traditional or Roth] IRA in a trustee-to-trustee transfer. The [traditional or Roth] IRA contribution of $[contribution amount] [was or was not] deducted on form 1040, schedule 1.

[phildonnia]

You'd think it would be pretty easy to add "Attach a Statement" to FFFF. 

Particularly, the one about Roth Distributions, which is probably pretty common. 

Maybe the IRS could introduce something like this for individual returns:
https://www.irs.gov/pub/irs-pdf/f990so.pdf

[secondcor521]

I'm not sure if any of the commercial products allow you to attach a statement.

One thing you could do is just print out the tax return from FFF, write the statement in a word processor and print it out, and then attach it to the tax return and mail it in.  You could still get direct deposit that way, it'll just take a couple of weeks longer for it to get to and be processed by the IRS.

Another option to look into is the Form 8453, I think it is, which allows you to just mail in the attachment associated with the return.  Some tax prep programs, even if they don't support you uploading a statement, will probably allow or support e-file + 8453.

[katstache92]

In previous years I've been able to attach a statement with Tax Act.  This year, I am refusing to pay their very high price.

I know I can print out my freetaxusa return and mail it in with a statement I generate, but I am trying not to go to the post office in order to do certified mail.

I am now thinking of using FFFF to avoid the post office, and I was wondering what your thoughts are on using Form 8275 as the 'attached statment.'

From the directions of the form below, it kind of sounds like this might be reasonable, but I am quite uninformed in this area and was hoping for a few other opinions on this idea.

"Form 8275 is used by taxpayers and tax return preparers to disclose items or positions, except those taken contrary to a regulation, that are not otherwise adequately disclosed on a tax return to avoid certain penalties."

[geoffrey4283]

I've been using Taxslayer the last few years, but found myself in need of an IRA recharacterization, and found out that they don't support attaching the supporting statement.

I'm a sicko that likes trying out different tax softwares each year (comparing their results to find things that were missed in one or the other until I get a consensus on my tax return), so I also ran through TurboTax, HRBlock, and TaxAct.  Results?  Couldn't find any way to attach supporting statements for TaxSlayer nor TaxAct (I could barely get TaxAct to recognize my various IRA issues).  TurboTax and HR Block both recognized my recharacterization and prompted me to provide a statement.  I'll also note: HRBlock was bass-ackwards about how it identified my IRA situation, but eventually got to where it needed to be.  TurboTax was much cleaner about it, but at almost 50% more cost, no thanks.

As noted by others, simplest solution is to print it out and mail it in?  I did take a look at Form 8453, but it seems to have a fairly specific list of things that it expects to be attached.

[MDM]

I've been using Taxslayer the last few years, but found myself in need of an IRA recharacterization, and found out that they don't support attaching the supporting statement.

In the TaxSlayer version used by VITA, there is Federal>Miscellaneous Forms>Explanations>Preparer Notes.  See p. O-4 in https://www.irs.gov/pub/irs-pdf/p4012.pdf.  Don't know if that is available in the version for personal use.

[geoffrey4283]

In the TaxSlayer version used by VITA, there is Federal>Miscellaneous Forms>Explanations>Preparer Notes.  See p. O-4 in https://www.irs.gov/pub/irs-pdf/p4012.pdf.  Don't know if that is available in the version for personal use.

Thanks for the suggestion; that section exists in the Classic edition I have access to, but only contains the following options:
Allocation of Tax Amounts for Individuals in Certain States (Form 8958)
Application for Automatic Extension of Time to File (Form 4868)
Injured Spouse Allocation (Form 8379)
Installment Agreement Request (Form 9465)
IRS Identification Pin (CP01A notice)
Statement of Person Claiming Refund Due a Deceased Taxpayer (Form 1310)

[MDM]

In the TaxSlayer version used by VITA, there is Federal>Miscellaneous Forms>Explanations>Preparer Notes.  See p. O-4 in https://www.irs.gov/pub/irs-pdf/p4012.pdf.  Don't know if that is available in the version for personal use.

Thanks for the suggestion; that section exists in the Classic edition I have access to, but only contains the following options:
Allocation of Tax Amounts for Individuals in Certain States (Form 8958)
Application for Automatic Extension of Time to File (Form 4868)
Injured Spouse Allocation (Form 8379)
Installment Agreement Request (Form 9465)
IRS Identification Pin (CP01A notice)
Statement of Person Claiming Refund Due a Deceased Taxpayer (Form 1310)

OK, different software versions then.  The VITA version has those, and also allows for W-7 and form 2848, in addition to the catch-all "Explanations".

[phildonnia]

I am now thinking of using FFFF to avoid the post office, and I was wondering what your thoughts are on using Form 8275 as the 'attached statment.'

I've never used this form.  But as I understand it, the purpose is to make a statement like "I'm doing something kind of kinky here, but I think it's okay, and I'm letting you know up front."  The idea being, if you declared it, then there are no penalties for trying to put one over on the IRS.

I'm also interested in whether it could be used just to make general statements.

[MustacheAndaHalf]

In your situation, I first would file my taxes electronically without the attachment, and then file 1040X to amend my return, and include the attachment there.  Both you and the IRS would probably prefer electronic filing (it's more efficient for them), and many people forget things and have to amend their returns.  I'm not a lawyer, and that could increase your audit risk - I personally use very conservative decisions so even if audited the IRS will be wasting their time.

As an aside, I thought recharacterizations were no longer allowed?

https://www.investopedia.com/terms/r/recharacterization.asp
"The strategy of recharacterizing from a Roth back to a traditional IRA was banned by the Tax Cuts and Jobs Act of 2017."

[secondcor521]

As an aside, I thought recharacterizations were no longer allowed?

https://www.investopedia.com/terms/r/recharacterization.asp
"The strategy of recharacterizing from a Roth back to a traditional IRA was banned by the Tax Cuts and Jobs Act of 2017."

I didn't read the article you linked, but I have found Investopedia to be lacking in specificity.

Recharacterizations of conversions are no longer allowed.  Recharacterizations of contributions are still allowed.  So OP is either breaking the law or just recharacterizing their contributions - probably the latter.