After you file

Yes, you will have to file a 2021 Form 8606 to report your nondeductible traditional IRA contribution for 2021. It is a good idea to provide a letter explaining the reasonable cause for missing it in last year's return to avoid the $50 penalty for not filling Form 8606 on a timely basis.  

You will have a $6,000 basis on line 14 of your 2021 Form 8606 that you will have to enter on your 2022 tax return when you enter your nondeductible traditional IRA contributions for 2022 (steps 8 and 9).

To enter the nondeductible contribution to the traditional IRA:

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” if you had a nondeductible contribution before this tax year.
9. Enter your basis in the Traditional IRA from your 2021 Form 8606 line 14 ($6,000)
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 conversion ($17,000): 

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 "Review your 1099-R info" screen click "Continue"
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

Yes, if the value of all of your traditional/SEP/SIMPLE IRAs was $0 on December 31, 2022, then only the $5,000 will be taxable for the conversion.

Next year on your 2023 tax return you will repeat the steps to enter your nondeductible contribution for 2023 and the conversion you made in 2023.