Hello,
Looking for additional clarification on this item.
History:
Due to income limitations, I have been completing 'backdoor' Roth contributions and conversions since the 2020 tax year. I have no other IRAs other than the "Traditional" IRA I use to contribute funds into which are then immediately converted to my Roth IRA. I do not show any tax savings on my tax returns for these transactions.
In February 2021, I contributed and converted my 2020 and 2021 traditional IRA contributions that were immediately converted to a Roth IRA. In calendar 2022, I contributed and converted my 2022 contribution in calendar 2022.
Issue/Problem:
For the calendar 2023 YR, I contributed to my traditional IRA in 2023 (late December) $7500, but the amounts did not settle into Fidelity until 2024 so I was unable to do the conversion until about a week later in calendar 2024 and this generated about $5 in interest in the traditional IRA account. What should I expect to see in my 2023 tax form? Just Form 8606 with Line 14 Populated with a basis of $7,500?
For the 2023 return, I am only able to complete the 'first step' on the tax return: the contribution to the traditional IRA. I cannot do step two of the conversion since that did not happen until 2024 and those tax forms were not generated by Fidelity for 2023. I intend to do both the 2024 contribution and conversion for calendar year 2024 well before year end, so I will deal with the contribution for calendar 2024 in the tax year 2024 as well as the conversion of both 2023 and 2024 in tax year 2024. I assume due to this, my 2024 tax return will show a basis in calendar 2023 of the $7,500 that was not converted in calendar 2023.
The difference between calendar year 2020 and 2023 is that calendar year contribution and conversion occurred in calendar 2021, where as in calendar year 2023 taxes, the 2023 contribution occurred in calendar 2023 and the conversion occurred in 2024...maybe this doesn't make a difference?
As it currently stands, my 2023 taxes did not generate the "Schedule 1" ,as another expert referenced, in which line 20 should be zero. Should it have, and if so why didn't it? The software only generated form 8,606 with $7,500 populated on Line 14.
For calendar year 2024, should my calendar 2024 contribution and conversion be $8,005 - of which $5 will be taxable? This would include the $5 interest that is still in my traditional IRA (I have no other IRA accounts). If so, what forms should I expect to see generated related to this to show that there is approx. $5 that is taxable. Or - should I have converted that $5 in 2023?
Would this transaction reset my '5 year rule' ( I am not concerned if this is the case, but just want to know).
The main priority I suppose is making sure my Tax Yr 2023 forms are correct:
- Form 8606
- Line 14 $7,500
- No other lines populated
Thank you
