Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15. See below for how to submit a question.
I converted a traditional IRA with $63,120.63 to a Roth IRA in 1998. My total dollar input to the original IRA was $8,000 in pretax dollars and then $8,000 in after-tax dollars after my employer instituted a retirement plan. How do I properly fill out my tax returns over the next four years?
You'll need to complete Form 8606 for 1998 and the subsequent three years. You are allowed to pay the tax on the portion of the rollover in excess of your basis in IRA over a four-year period if you meet these conditions: The 1998 transfer met all the Roth conversion requirements; your filing status is other than married-separate and your adjusted gross income (not including rollover amounts) was less than $100,000. Form 8606 helps you make that calculation in Part II (include your $8,000 after-tax contribution on line 15) and has you transfer the taxable portion to be included as part of the line 15b entry of Form 1040. The four-year spread is not required and you can elect out of it if it would benefit your personal situation (e.g., if your 1998 income is unusually low).
Craig Duncan, CPA Young Brophy & Co.
The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.
To ask a tax question, call Sundial, The Sun's telephone information service, at 410-783-1800. Call 410-268-7736 in Anne Arundel County, 410-836-5028 in Harford County, 410-848-0338 in Carroll County. Using a Touch-Tone phone, punch in the four-digit code 6225 after the greeting. To submit questions by e-mail and access an online tax guide, go to The Sun's Web site at www.sunspot.net/tax.
Selected questions will be answered in the Business section. No questions will be answered personally.
Pub Date: 2/25/99