dmertz, thank you for this detailed explanation. I followed the steps but still see " you currently have penalty" due to excess contribution to Traditional IRA. Can you help me resolve that?
My situation is similar to this post since in April 2022 I made $7k for 2022 and $7k for 2021 Traditional IRA contribution on Vanguard which i then converted to Roth right away. (Had i known all this headache I would have never made it the prior year contribution, but it was an easy selection on the screen). Since it was close to the tax file date, we didn't receive 1099-R then so this form was not entered, nor form 8606 added.
Yesterday - 2.5.2023 I received 1099-R Vanguard form for my 2022 contribution of $14,000 amount.
I was thinking that i can just send IRS form 8606 for 2021 (with Cost basis Dec 31 2021 of $7k), then list this tax basis in Turbo tax for "prior year, but then i am getting the message " you have a penalty" for excess contribution.
Would you say that this approach is not going to work (just submitting standalone 8606 form to IRS for 2021 and listing all $14,000 in 2022 return). Do i have to do an amendment for 2021 where i enter 1099 R with $7k (kind of splitting the current 1099 R that has the combined 2021/2022 amount into two portions).
Any help would be greatly appreciated.
