brightxy
New Member

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

  1. Open your return if it’s not already open.
  2. Search for ira contributions and select the Jump to link in the search results.
  3. Select Traditional IRA on the Traditional IRA and Roth IRA screen and continue.
  4. Answer Yes on the Did you Contribute To a Traditional IRA? screen.
  5. Answer No on the Is This a Repayment of a Retirement Distribution?
  6. On the Tell Us How Much You Contributed screen, enter the amount contributed and continue.
  7. Answer No on the Did You Change Your Mind?
  8. Depending on your situation, answer the remaining questions.

Step 2: Enter the Conversion from a Traditional IRA to a Roth IRA

  1. Inside TurboTax, search for 1099-r and select the Jump to link in the search results.
  2. 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.
  3. Select how you want to enter your 1099-R (import or type it in yourself) and follow the instructions.
  4. You should see the Good News: You Don’t Owe Extra Tax on This Money screen. Continue.
  5. Answer No to Did You Inherit This IRA?
  6. On the What Did You Do With The Money From This Payer? screenselect I moved the money to another retirement account (or returned it to the same retirement account).
  7. Next, choose I converted all of this money to a Roth IRA account.
  8. 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:

  1. Select Forms in the upper-right corner of the screen.
  2. Select Form 1040 from the left menu.
  3. 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.
  4. Select Schedule 1 from the menu on the left side of the screen. Line 19 IRA deduction should be blank.
  5. 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