I am totally confused by this. I am trying to get my basis corrected and file the correct 8606 forms. Here's the history:
I rolled over a traditional IRA in 2007 that I received in my divorce and had no activity until 2016 when I recharacterized a 2015 contribution of 6,500 from the traditional to my Roth. Basis would then be 6,500 at 12/31/16?
2017 contribution made to Roth only
2018 contribution of $6,500 made to Roth then on 4/19/19 fax recharacterization request to custodian requesting it be recharacterized as a 2018 contribution to traditional since income was too high for 2018. Took deduction for 2018. Later discovered custodian reported as 2019 contribution and refused to change it even though my cpa said we had until the extension due date that was filed to make the recharacterization. That's a side issue, currently corresponding with IRS to straighten out.
2019 contribution of 7k made to traditional then converted to Roth for 2020. 12/31/19 basis 13,500?
2020 contribution of 7k made on 4/21/21 then converted to Roth for 2021. 12/31/20 basis 20,500?
What a mess! I'm confused about the prorating and why there is tax on it when the whole contribution was converted each time except for the beginning rollover balance which has remained there. The IRS instructions are not very helpful. Why do they ask for the total value and what exactly does that mean? The total balance in the account including the rollover? That seems to trigger the proration.
I filed a 2020 extension and paid the estimated amount but would like to finalize my return with the correct amounts and file any corrected 8606 forms needed asap. Any help would be greatly appreciated!
