DanaB27
Expert Alumni

Get your taxes done using TurboTax

Yes, since you made the $6,000 contribution for 2021 you will enter it on your 2021 tax return and make it nondeductible:

 

  1. Login to your TurboTax Account 
  2. Click on "Search" on the top right and type “IRA contributions”
  3. Click on “Jump to IRA contributions"
  4. Select “traditional IRA
  5. Answer “No” to “Is This a Repayment of a Retirement Distribution?
  6. Enter the amount you contributed $6,000
  7. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
  8. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (if you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible).

 

TurboTax will create Form 8606 and you will have the $6,000 listen on line 1, 3 and 14 (there is only line 14 on Form 8606 no a or b).

 

 

 

 

Next year on your 2022 tax return:

 

To enter the $6,000 nondeductible contribution to the traditional IRA for 2022:

  1. Login to your TurboTax Account 
  2. Click on "Search" on the top right and type “IRA contributions”
  3. Click on “Jump to IRA contributions"
  4. Select “traditional IRA
  5. Answer “No” to “Is This a Repayment of a Retirement Distribution?
  6. Enter the amount you contributed $6,000
  7. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
  8. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” since you had a nondeductible contributions before this tax year.
  9. Enter the $6,000 basis in the Traditional IRA from 2021 Form 8606 line 14.
  10. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (if you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible).

 

To enter the 1099-R for both conversion: 

 

  1. Click on "Search" on the top right and type “1099-R”
  2. Click on “Jump to 1099-R”
  3. Click "Continue" and enter the information from your 1099-R
  4. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA
  5. On the "Your 1099-R Entries" screen click "continue" after entering all 1099-Rs
  6. Answer "yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
  7. Answer the questions about the basis from line 14 of your 2021 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

 

 

When entered correctly only the earnings should be taxable on line 4b of Form 1040 in the 2022 conversion. The $12,000 should be tax-free because you made nondeductible traditional IRA contributions. Please be aware, if you had any pre-tax funds in your traditional, SEP, and SIMPLE IRAs then this won't be true since then the pro-rata rule applies.

 

 

 

@620kansas

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