Author Topic: Form 8086 - Part 1 requirements  (Read 1172 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....