@kjoltman wrote:
I am still having problems properly taxing my ira earnings. My IRA basis as of December 31, 2019 was in reality $0, because I made a $7000 contribution for 2019 in early 2020 and another $7000 for 2020. (2019 taxes are correct). When I put $0 as my basis it doesn’t tax the $23.64 earned (shown in my 1099r box 1 and 2a as14,023.64) and if I put $7000 as my basis it taxes all $14023.64. If I put $14000 it taxes $16, closer but not correct. If I put anything other than $0 it also makes me provide an explanation. Help!
Your 2019 contribution made in 2020 must be reported on your 2019 tax return. If non deductible then you must have a 2019 8606 showing the non-deductible contribution on line 1, 3 & 14.
Tax law says a contribution for the prior year made before the filing date is "deemed" to have been made on Dec 13 of the previous year so your 2019 year end basis is not zero.
Be sure that you entered the 2020 non-deductible contribution in the 2020 IRA contribution interview. The when it asks for the prior years basis enter the 2019 8606 box 14 amount.
**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.**
