Hello, and apologies in advance for the complicated explanation!
In 2022, I didn't work, so I had no earned income, only investment income. I contributed $6,000 (of post-tax money) to a traditional IRA in Jan 2022. A few days later, I converted the whole thing (still worth $6,000) to a Roth IRA.
I realized in early 2023 that I should not have contributed to an IRA in 2022 because I didn't have any earned income that year. To correct this, I withdrew the entire excess contribution ($5,055, value had decreased) from the Roth IRA. I did this in 2023, but before the 2022 contribution deadline.
Because I withdrew the excess 2022 contribution in early 2023, I am getting ready to amend my 2022 return using the 2023 1099-R.
However, I have been examining the 2022 return I filed with TurboTax. It looks like I was taxed on the entire $6,000 involved in the original Roth conversion:
- Form 1040 Box 4a (IRA distributions) and 4b (Taxable amount) both contain $6,000
- Form 8606 Part 1 is all blank. Part 2 Line 16 (conversion amount) is $6,000, and Line 17 (basis) is $0, so Line 18 (Taxable amount) is $6,000.
- IRA Information Worksheet line 59 (2022 conversion contributions taxable at conversion) is $6,000
- Schedule 1 Line 20 (IRA deduction) is blank
I get that converting a non-deductible trad IRA to Roth makes the whole amount taxable, but I think the original contribution was deductible (made with post-tax money, no employer retirement plan in 2022), but it looks like I didn't get the deduction.
Relevant things I entered in TurboTax:
- Total value of my traditional IRAs on Dec 31, 2022: $0 (because I had already converted to Roth by then);
- Excess Contribution Withdrawn Before Due Date of Your Return: $6,000
I am wondering if I should have put $0 for excess contributions withdrawn, because they were withdrawn from the converted Roth IRA, not from the original Traditional IRA?
It seems wrong that I both didn't get the deduction for the $6,000 original contribution and paid tax on the $6,000 when I converted it to Roth. Obviously, it's more complicated, because I later undid the excess contributions, but it still feels like my taxable was $6,000 too high?
Hope some of that made sense. Thanks for any advice!
