@barnabei wrote:
Hi all,
Need some help with backdoor Roth contributions and the 8606 form. I’m married filing separately with an AGI >10k so I can’t make tax deductible IRA contributions. In 2020, I converted $9000 of this traditional IRA $ to Roth (looks like I had left some in the traditional IRA in 2019 and realized it in 2020. This was probably an oversight, as I generally intend to immediately convert from Trad to Roth). So, since 2018 I’ve been making backdoor contributions to my Roth. My 2018 8606 shows $5500 in non-deductible contributions and a basis of $5500 (box 14), and my 2019 8606 shows 6000 in non-deductible contributions in line 1 and $5500 in line 2 (basis). Line 5 shows $11,500, I can’t see anything in lines 6-12 (TT refers to a Taxable IRA Distribution Worksheet that I can’t locate), then line 13 is $8536 and line 14 is 2964. Fast forward to the 2020 return and I’m asked to enter the total basis and I enter $2964. At the end of income my total IRA contributions are $9000 but only $2956 are non-taxable, leaving me with taxes for the other ~$6k as if it were additional income. Can someone help me understand what is going on here? Why is some seemingly random percent of this money taxable? Is there a way to make all these distributions non-taxable in future years?
-Matt
It would appear that for 2020 you made no new contributions that would be on the 2020 8606 line 1 so your only basis is the left over $2,964 and only $2,956 could be used because there was probably more then a zero IRA year end value on the 8606 line 6 (or IRA deduction worksheet line 4 of an * next to line 15) so an amount of $8 remaining basis on line 14.
That is just a guess - view the 2020 8606 and worksheet (if an * next to line 15) for the actual calculations that should tell you
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
