Form 1099-R - Cost Basis

The TaxAct program will not prompt you to enter the basis of your traditional IRAs if you do not have some key elements entered on your Form 1099-R. Please follow the instructions below to access the screens regarding the basis of your Traditional IRA.

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click the menu icon in the upper left-hand corner, then select Federal.
  2. Click Retirement Plan Income in the Federal Quick Q&A Topics menu to expand the category and then click IRA, 401(k), and pension plan distributions (Form 1099-R)
  3. Click +Add Form 1099-R to create a new copy of the form or click Review to review a form already created 
  4. Select Step-by-Step Guidance
  5. Continue to the screen titled Retirement Plan Income - Distribution Amount. Enter the amount of your distribution in 1. Gross distribution AND check the box Taxable Amount Not Determined OR enter the amount of your distribution in 1. Gross distribution AND the amount of your taxable distribution in 2. Taxable amountand then click Continue
  6. Check the IRA/SEP/Simple box, select the appropriate distribution code from the paper copy of your 1099-R
  7. Continue to the screen titled Retirement Plan Income - Nondeductible IRA Contributions and check the box Prior year nondeductible traditional IRA contributions(s)
  8. Once you get back to the Form 1099-R - Summary screen, continue to the screen titled Nondeductible IRAs - Form 8606 - [Taxpayer or Spouse] and click Continue
  9. The program will proceed with the appropriate questions regarding the basis of your IRA

The basis amount entered will transfer to Form 8606, Line 2.

Per IRS Publication 590-A Contributions to Individual Retirement Arrangements, page 16:

Cost Basis. You will have a cost basis in your traditional IRA if you made any nondeductible contributions. Your cost basis is the sum of the nondeductible contributions to your IRA minus any withdrawals or distributions of nondeductible contributions.

Refer to Are Distributions Taxable? starting on page 28 of Publication 590-B for additional information.