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Get your taxes done using TurboTax
No, your 8606 doesn't seem correct.
To clarify, you entered the $5,500 contribution as a nondeductible traditional IRA contribution on your 2018 tax return and $6,000 as a nondeductible traditional IRA contribution on your 2019 tax return, correct? This should have triggered the Form 8606 in those years and you have a basis of $11,500 for 2019.
Do not enter the 2020 $6,000 contribution as a traditional IRA contribution you will have to enter the recharacterization like this:
- Open TurboTax
- Click on "Search" on the top right and type “IRA contributions”
- Click on “Jump to IRA contributions"
- Select “Roth IRA”
- Answer “No” to “Is This a Repayment of a Retirement Distribution
- Enter the Roth contribution amount $6,000
- Answer “Yes” to the recharacterized question on the “Did You Change Your Mind?” screen and enter the contribution amount $6,000 (no earnings or losses)
- TurboTax will ask for an explanation statement where it should be stated that the original $xxx.xx plus $xxx.xx earnings (or loss) were recharacterized.
- On the screen "Choose Not to Deduct IRA Contributions" answer "Yes"
To enter the conversion from the 1099-R:
- Click on "Search" on the top right and type “1099-R”
- Click on “Jump to 1099-R”
- Click "Continue" and enter the information from your 1099-R
- Answer questions until you get to “What Did You Do With The Money” and choose “I moved it to another retirement account”
- Then choose “I did a combination of rolling over, converting, or cashing out money.” and enter the amount next to "Amount converted to a Roth IRA account"
- On the "Your 1099-R Entries" screen click "continue"
- Answer "yes" to "Any nondeductible Contribution to your IRA?"
- Answer the questions about the basis ($11,500) and value
You will have on line 14 Form 8606 the $6,000 basis from the 2020 contribution and will enter your 2021 conversion with the steps above on your 2021 tax return (enter $6,000 basis in step 8).
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March 27, 2021
5:48 AM