@randybrandt1 wrote:
You mention - "when it asks for prior year non deductible contributions". I will assume you are referring to the screen titled "Let's Find Your IRA Basis" where it mentions looking at your Form 8606.
This is a bit confusing because I don't have a Form 8606 from a previous year (as i didn't contribute anything until 2020). Then the question asks "Total Basis as of December 31, 2019" - technically speaking my cost basis was zero as of that date, as I didn't make a contribution until 2020. But maybe from a tax year perspective it still counts regardless of the exact timing?
Regardless, I did add 6K here to account for 2019 basis, and this did negate my tax burden for this activity.
I appreciate the assistance!
You said that you made a 2019 contribution *in* 2020. Since it was a contribution *for* 2019, it can only be reported on a 2019 8606 form line 1, 3 & 14. If you failed to enter it on your 2019 tax return, you must amend 2019 and add it, then mail to the IRS. Without the 2019 8606 the non-deductible 2019 basis will be lost and you cannot apply it to the 2020 conversion.
When you do that and enter but the 2020 non-deductible contribution in the 2020 IRA contribution interview and the 2019 8606 line 14 as stated above, then on your 2020 8606 the 2020 contribution will be on line 1, the 2019 contribution opn line 2 and the total on line 3 to offset the tax on the 2020 conversion.
**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.**
