Help!
As usual, I am confused on the back door roth conversion. In my example below for my forms by year 2020 and 2021, why did Form 8606 in the 2020 return populate $7,000 on line 14 ...but...in the 2021 tax year, Form 8606 had $0 on line 14?
Is it because the contribution and conversion for 2020 did not occur until 2021, so form 8606 had a value in line 14? Then, because the 2021 contribution and conversion and the 2020 contribution and conversion occurred in calendar 2021, it left a ZERO balance in 2021, therefore Form 8606 line 14 in calendar 2021 had a $0?
Now I am doing my 2022 back door Roth conversion (both contribution and conversion occurred in calendar year 2022). Turbo tax wants to populate $0 in 2021 traditional IRA basis (makes sense, since line 14 on 8606 for 2021 was $0). Is this correct?
Would this mean that any year where the contribution and conversion occurred in the same calendar year as tax reporting year - the basis turbo tax will over is $0. For example, when I do my 2023 taxes, form 8606 will pull over $0 basis for traditional IRA for 2022 (because contribution and conversion occurred calendar year 2022).
But let's say for example, I contributed and converted my 2022 contribution in January 2023 (just for example, I did not do this in 2022) - would turbo tax for 2022 pull over a basis of $7,000 for the traditional IRA basis for 2022?
Original Transaction:
- March 2021 (all on same day)
- $7,000 contribution made to traditional IRA – tax year 2020
- $7,000 contribution made to traditional IRA – tax year 2021
- $7,000 conversion to Roth IRA – tax year 2020
- $7,000 conversion to Roth IRA – tax year 2021
2020 Tax Return:
- Form 1040
- Line 4 (a) $0/blank
- Line 4 (b) $0/blank
- Form 8606
- Line 1 $7,000
- Line 3 $7,000
- Line 14 $7,000
2021 Tax Return:
- Form 1040
- Line 4 (a) $14,000
- Line 4 (b) $0
- Form 8606
- Line 1 $7,000
- Line 2 $7,000
- Line 3 $14,000
- Line 5 $14,000
- Line 13 $14,000
- Line 16 $14,000
- Line 17 $14,000
- Line 18 $0
