I file married jointly and we are both under age 59. In 2020 and for 2021, I was above the income limit for contributions to an IRA. My spouse and I both had former traditional IRAs which we had contributed to prior to reaching the income limits. On Dec 10, 2020 my spouse converted all of her traditional IRA to her Roth IRA (distribution code 2). On Dec 24, 2020, I took a total distribution from my IRA (distribution code 1). (If I remember correctly, the reason I could not convert to a Roth is because I have a 401(k) also, but not 100% sure about that.) These were done in order to get our total traditional IRA balance to zero so that we could start doing backdoor Roth IRAs cleanly. Our 2020 1099-R shows these distributions. I paid an early withdrawal tax on the one which had the total distribution (code 1).
On Dec 17, 2020 my spouse contributed $6,000 to her traditional IRA as a non-deductible amount, then immediately converted it to her Roth IRA for the tax year 2020. In Feb 2021, I contributed $6,000 to my traditional IRAs as a non-deductible amount for the 2020 tax year, then immediately converted it to my Roth IRA. We both received 5498s in 2021 showing these contributions and only these contributions.
In April 2021, I contributed $6,000 to my traditional IRA as a non-deductible amount for the 2021 tax year, then immediately converted it to my Roth IRA. In Oct 2021 my spouse contributed $6,000 to her traditional IRA as a non-deductible amount for the 2021 tax year, then immediately converted it to her Roth IRA. My 2021 Form 1099-R shows an amount of $12,000 on both lines 1 and 2a, and my wife's shows $6,000 on those lines. Both of our 1099-Rs have distribution code 2 checked and the IRA/SEP/SIMPLE box checked.
For all the contributions mentioned above, we made them through our online brokers, which have controls built in to ensure that only amounts up to the maximum contributions ($6,000 each in our case) can be made per tax year.
Issue #1?
Upon recent review of my 2020 TurboTax-prepared return, I noticed that TurboTax did not generate a Form 8606 for me, even though it did generate one for my spouse (showing her $6,000 contribution). I raise this because I suspect it may be contributing to Issue #2, below.
Issue #2?
The 1099-R Summary worksheet in TurboTax for my 2021 return-in-progress shows (1) an amount of $12,000 on line 5 "Amount of line 2 not converted to a Roth IRA" and (2) an amount of $6,000 on line 8 "Taxable amount not converted to a Roth IRA". This has the effect of including the $6,000 as additionally taxed income even though it was a conversion to a Roth IRA from a non-deductible traditional IRA. I have answered all the questions in the online software as best as I can to interpret the facts stated above, and cannot figure out why the program is not treating these as backdoor Roth IRA conversions which should not incur any additional tax.
Any help would be much appreciated. I've provided as many facts as I can think of that are relevant, but can provide more if needed. Thank you, Community!
