I have some very basic questions (I searched but somehow I can't find the answers).
1. I have read that TurboTax automatically generate Form 8606 for me. Where can I see that? (I have input 1099-R and related information but I haven't submitted my tax return yet.)
2. Regarding the "total basis" on Form 8606, my understanding is that "total basis" refers to the portion of my IRA that has already been taxed. The higher this "total basis" is, the less $ I would get double-taxed.
Let's say I contributed after-tax $7k to my Traditional IRA, and I converted that $7k to Roth IRA (within the same month). My Traditional IRA has accrued $10 interest.
So, if I file 8606 myself, line 13 would be $7000 / $7010 * $7000 = $6990 while line 14 would then be $7000 - $6990 = $10. That means the nontaxable portion of all my distributions (line 13) is $6990 while my total basis (line 14) is $10.
According to the definition above, total basis is the portion that has already been taxed, then how come it's just $10?
3. As stated in the previous point, the $7k contribution is after-tax, and the only pre-tax amount in my Traditional IRA is just $10. Following the pro rata rule, my $7k conversion to Roth IRA should be taxed very minimally. However, looks like TurboTax taxes my $7k (which makes that double-taxed). Is that because of line 14 being $10? Where / how should I correct this?
Thank you so much for your help!!
