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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 Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc..

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 in the upper left-hand corner, then click Federal.
  2. Click Retirement Plan Income in the Federal Quick Q&A Topics menu to expand, 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 Edit to review a form already created.
  4. Click Quick Entry to scroll down to answer all applicable questions or click Step-by-Step Guidance to proceed with the program interview questions.
  5. On the screen titled Retirement Plan Income - Distribution Amount, enter the 1. Gross distribution amount AND check 2b. Taxable amount not determined; OR enter the 1. Gross distribution amount AND the 2a. Taxable amount, then click Continue.
  6. On the screen titled Retirement Plan Income - Box 7, check 7. IRA/SEP/SIMPLE, select the appropriate distribution code from the 7. Distribution code drop-down, then click Continue.
  7. On the screen titled Retirement Plan Income - Nondeductible IRA Contributions, check Prior year nondeductible traditional IRA contributions(s), then click Continue.

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

Per IRS Publication 590-A Contributions to Individual Retirement Arrangements (IRAs), on 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 the "Are Distributions Taxable?" section starting on page 28 of Publication 590-B Distributions from Individual Retirement Arrangements (IRAs) for additional information.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.


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