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Retirement tax questions
Here is how I interpret your timeline:
- May 2019: Roth IRA contribution of $3000 for tax year 2019
- Jan 2020: Roth IRA contribution of $3000 for tax year 2019
- Feb 2020: recharacterized all $6000 from tax yr 2019. (found out about income rules)
- March 2020: converted all $6000 back to roth in tax year 2020.
- Nov 2020: traditional IRA contribution of $6000 for 2020, then converted to roth in tax year 2020
Your Forms 1099-R reflect this. You converted $12,000 in 2020 (code 2 Form 1099-R) and in 2020 you recharacterized $6,000 of Roth IRA contributions to be traditional IRA contributions instead.
Ignore TurboTax's summary of "income" and look at your 2020 Form 8606 and Form 1040 line 4b.
You indicated that your 2019 tax return reported the resulting $6,000 nondeductible traditional IRA contribution for 2019 on Form 8606, so line 14 of the form should show $6,000. That transfers to line 2 of your 2020 Form 8606. Your 2020 Form 8606 should have:
- Line 1 = $6,000
- Line 2 = $6,000 (from line 14 of 2019 Form 8606)
- Line 3 = $12,000
- Line 6 = $0 (I assume that you had no money in traditional IRAs on December 31, 2020)
- Line 8 = $12,xxx
- Line 13 = $12,000
- Line 14 = $0 (or blank)
- Line 16 = $12,xxx
- Line 17 = $12,000
- Line 18 = $xxx
Lines 6 and 8 will be blank and asterisks will be next to lines 13 and 15 if TurboTax chooses to use Worksheet 1-1 from IRS Pub 590-B, but the taxable result should be the same.
Form 1040 line 4b should show $xxx.