@dmertz @fanfare, thank you for all the help thus far!
I submitted my 1040-X and 2021 8606 together a few months ago and everything was quiet.
On the 1040-X, I left 1-30 blank and included my explanation of the changes in Part III:
"I did not include my 2021 Form 8606 with a Form 1040-X. Since I am only changing information, I’ve left lines 1-23 blank.
Explanation of Recharacterizations & Conversion of 2021 Roth IRA Contributions: In 2021, I contributed directly to and maxed out my Roth IRA. In 2022, I realized that I exceeded the lower bound of the 2021 Roth IRA income limit range, so I recharacterized my 2021 Roth IRA contributions into a Traditional IRA. I then converted these funds from the Traditional IRA back to my Roth IRA. My 2021 Form 8606 shows that I have a basis to carry forward to 2022 due to my non-deductible Traditional IRA contributions. My 2022 Form 8606, which I included with my 2022 Form 1040, takes into account the $6,468.52 that was converted to the Roth IRA."
In my 2021 8606, I had the following:
1. 6000
2. 0
3. 6000
14. 6000
On 1/1/2024, however, I received a letter from the IRS stating:
"We made the changes you requested to your 2021 Form 1040 to adjust your pensions and annuities. As a result, you owe $2,035.84.
Increase in tax: $1,826.00
Increase in interest: $209.84
Amount due by January 22, 2024: $2,035.84"
I called the IRS and the agent informed me that the info in my 2021 8606 led the IRS to categorize something as income and that's why I'm receiving a tax bill. The agent said that I would need to send the IRS a letter explaining why I think the tax bill is incorrect.
I do not know how my 2021 8606 would show income. In the explanation, I said I contributed to my Roth IRA in 2021 and recharacterized / converted those funds in 2022. I submitted the 2021 8606 to show that I have a basis of $6,000 to carry forward to 2022.
Why would the IRS think I have additional income to pay taxes on? Did I do something incorrect?
I would really appreciate any advice. Thank you and Happy New Year!
