Hello,
In 2019 I contributed $5,500 to my Roth IRA and $500 (after-tax) to my Traditional IRA. I realized I was going to earn too much money for Roth IRA in December so I contributed by monthly $500 (after-tax) to Traditional IRA and filed for 8606 for $500 basis. When preparing my 2019 taxes in early 2020, I recharacterized the amount that I was over the limit based on my income per TurboTax's calculations.
In March 2020, I converted all my Traditional IRA to Roth IRA. Additionally, throughout 2020, I contributed a total of $6,000 (after-tax) to my Traditional IRA and then also converted all $6,000 to Roth IRA in 2020 (i.e. backdoor Roth). My form 2020 5498 shows the both the $6,000 (after-tax) contributions and the recharacterization of about $2,000.
I received form 1099-R for my Roth IRA showing the distribution of the recharacterized amount of about $2,000 in Box 1 Gross Distribution and $0 in Box2a Taxable Amount. I also received form 1099-R for my Traditional IRA showing total gross distribution of $20,000 (illustrative purposes number) in Box 1 Gross Distribution and $20,000 in Box 2a Taxable amount.
My question is should I include the recharacterized $2,000 as basis of the Traditional IRA for conversion or just the $500 after-tax contribution that is on the Form 8606? I am assuming part of the $20,000 distribution included the recharacterized $2,000 which was after-tax. Or was this already considered with the $0 taxable amount on the Roth IRA 1099-R?
