@Sarmor wrote:
Hi,
I had put in $6000 in my Roth IRA Nov 2020 for tax year 2020. In 3/2021, I realized my combined income was too high to contribute to Roth directly so I recharacterized $6000 + earnings ($2863) to Traditional IRA. I then did a back door conversion from Traditional IRA to Roth IRA a few days later. When I look at the 8606 generated from Turbo, why isn’t the $2863 noted as taxable income on line 15c? Did I answer something wrong or are earnings on an IRA recharacterizion not taxable? I just want to make sure I am doing this right.
Here is info from my 8606:
line 1: $6000
line 2: $0 (never contributed anything to traditional)
line 3: $6000
line 5: $6000
line 14: $6000
line 15: $0 (taxable amount, why is it not $2863)
Note Part II doesn’t show conversion from Traditional to Roth bc it was done in 2021 (I have to wait until next 2021 Taxes, right?)
BTW: that is one heck of an investment - $2,863 earnings in 4 months is about a 47% return. In a year it would be 143% - more than double the investment (if it keeps earning the same).
**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.**
