@panacea6565 wrote:
Thnak you Critter-3.
one more q: as the tIRA contribution is done in 2020 (tax filed with IRS in April 2021), does one have to file any amendment to this 2020-21 tax filing?
If you made a non-deductible contribution at any time, that should be reported on form 8606. If you made a non-deductible contribution in 2020 and not in 2021, you would not have a new form 8606, but you rely on the most recent 8606 you filed (which is why you need to keep your tax papers for longer than usual when you have a non-deductible basis in a traditional IRA.)
If you did not report the non-deductible contribution in 2020, you need to report that now. Because form 8606 has its own signature space, and because reporting a non-deductible contribution will not change your overall tax, you can file form 8606 by itself. Be sure to use the 2020 version of the form, not the current (2021 or 2022) version. The 2020 version is on the IRS web site but you have to look for it.
If your 2020 contribution was also non-deductible, and you make a 2022 non-deductible contribution, and you convert the entire amount, your non-deductible basis is $12,000 and your total balance is $13,000 so $1000 would be taxable income as a Roth conversion.
