[quote=SK in CV]The only brokerage numbers that are important are the FMV of the accounts as of 12/31 of the year prior to distribution. The brokerages do not report cumulative deductible or non-deductible contributions. That’s taxpayers’ responsibility. Those cumulative non-deductible contributions are supposed to be reported on tax returns every year (on form 8606), even if no new non-deductible contributions have been made for the tax year.[/quote]
The cumulative deductible and non deductible contribs are also reported to IRS by brokerage.
When the brokerages record goes wrong, you need to get it fixed. The brokerages now have additional tracking requirements – ie. they now track and report your basis to the IRS, while previously (several years back) they didn’t.
While your have to do your schedule-D with your calc’d basis, and manage carry-over losses, records of types of IRA contribs(post vs pre tax) etc, the IRS now runs a shadow record on incomes near $100,000/yr and up to ensure tax compliance on higher income individuals. I had the IRS correct me on a stock basis, the only way the IRS could have known was to have the record of stock transaction when I bought it a few years earlier (it was minor and in my favor). NOTE: Never been audited – so far
If you don’t think such tracking is possible:
300Mil people in the US, assume family of 4 – divide by 4 for number of tax returns.
Assume each tax return raw data takes 1 Megabyte (much more than needed – not storing web page or photocopy, just the numbers entered.)
This size of storage assumes the record of income earner is tracked, not top 20% or so.
No, I’m not paranoid. It might be easier if that was the case. Having been a Gov Contractor, I have seen some of the tracking. Google’s RAID/storage system gives an idea of what is actually possible. Google processes over 20 PB per day (1 PB = 1E15). I’ll let you work the math on how much they have in storage. This big-data world is getting a little weird and Orwellian.
Oh yes, a nit to pick –
[quote=SK in CV]Those cumulative non-deductible contributions are supposed to be reported on tax returns every year (on form 8606), even if no new non-deductible contributions have been made for the tax year.[/quote]
Check instructions – Part 1 on form 8606. Complete this part only if one or more of the following apply.
You made nondeductible contributions to a traditional IRA for 2016.
You took distributions from a traditional SEP, or SIMPLE IRA in 2016 and you made nondeductible contributions to a traditional IRA in 2016 or an earlier year.….
You converted part, but not all of your traditional, SEP, and SIMPLE IRAs to Roth IRAs in 2016…
Part II is on conversions.
Part III is on distributions from Roth IRAs.
