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Retirement tax questions
Hello,
I believe your answer would help in my situation, but I hope to rephrase my understanding to make sure I got it right. Hope you can help confirm:
Situation: In early 2021, I contributed after-tax money into my Traditional IRA for year 2020, and then followed the backdoor Roth to convert it into Roth IRA. Hereby I didn't receive any 1099-R form from my investment account.
As you mentioned, since the conversion happened in 2021, 1099-R should be reportable in my 2021 filing, which means if reflecting into TurboTax's official guide , I should do Step 1 and skip Step 2 (all the stroke-through steps). Is it correct understanding?:
Step 1: Enter the Non-Deductible Contribution to a Traditional IRA
- Open your return if it’s not already open.
- Search for ira contributions and select the Jump to link in the search results.
- Select Traditional IRA on the Traditional IRA and Roth IRA screen and continue.
- Answer Yes on the Did you Contribute To a Traditional IRA? screen.
- Answer No on the Is This a Repayment of a Retirement Distribution?
- On the Tell Us How Much You Contributed screen, enter the amount contributed and continue.
- Answer No on the Did You Change Your Mind?
- Depending on your situation, answer the remaining questions.
Step 2: Enter the Conversion from a Traditional IRA to a Roth IRA
Inside TurboTax, search for 1099-r and select the Jump to link in the search results.On the Your 1099-R screen, answer Yes to Did you have any of these types of income in 2020? and continue.If you land on the Your 1099-R Entries screen instead, select Add Another 1099-R.
Select how you want to enter your 1099-R (import or type it in yourself) and follow the instructions.You should see the Good News: You Don’t Owe Extra Tax on This Money screen. Continue.Answer No to Did You Inherit This IRA?On the What Did You Do With The Money From This Payer? screen, select I moved the money to another retirement account (or returned it to the same retirement account).Next, choose I converted all of this money to a Roth IRA account.Continue answering questions until you come to the Your 1099-R Entries screen.
To check the results of your backdoor Roth IRA conversion, see your Form 1040:
- Select Forms in the upper-right corner of the screen.
- Select Form 1040 from the left menu.
- Use the scroll bar to find:
Line 4a IRAs Distributions. Your backdoor Roth IRA amount should be listed.- Line 4b Taxable amount should be zero unless you had earnings between the time you contributed to your Traditional IRA and the time you converted it to Roth IRA.
- Select Schedule 1 from the menu on the left side of the screen. Line 19 IRA deduction should be blank.
- To return to where you left off in TurboTax, select Step-by-Step in the upper-right corner of the screen.
Thank you in advance