Hello!
I have a question about entering the details of my Backdoor Roth conversion correctly. It appears that the software is still treating the distribution from my 1099-R as taxable income.
Here is the situation:
- Background: I am single, under 50, have no other traditional/SEP/SIMPLE IRAs, and made no IRA rollovers, recharacterizations or other distributions.
- Tax Year 2023
- This is the first year I performed a backdoor Roth conversion.
- In March of 2024, I opened a Traditional IRA, contributed the maximum ($6,500). The same day, I converted the full amount from Traditional IRA to my Roth IRA for tax year 2023.
- In my 2023 tax filings, I filed Form 8606 through a tax professional.
- I have $6,500 in lines 1, 3, 5, 8, 9, 11, 16, and 17.
- I have $0 as the total basis in line 14.
- Tax Year 2024
- This year I am filing my own taxes with the help of TurboTax.
- I received a 1099-R for the amount $6,500 in boxes 1 and 2a. Both boxes in 2b are checked.
- In TurboTax, under Personal -> Personal Income -> Retirement Plans and Social Security -> IRA, 401(k), Pension Plan Withdrawals (1099-R), I've imported my 1099-R form.
- On the first screen, Great news, we got your 1099-R info! I selected Form 1099-R as the type.
- I get the screen that says, Good News: You Don't Owe Extra Tax on This Money, but this does not appear to be true as shown later.
- On the screen, What Did You Do With The Money From INSTITUTION?, I selected "I moved the money to another retirement account" and "I did a combination of rolling over, converting, or cashing out the money". I entered $6,500 for "Amount converted to a Roth IRA account".
- After a few more follow-up questions, I get the screen Any Nondeductible Contributions to Your IRA? and I select "Yes, I made and tracked nondeductible contributions to my IRA" since I have a Form 8606 from 2023.
- On the next screen I enter 0 as the Total Basis (to match the Form 8606 from 2023).
- On the next screen, I enter 0 as the Value as of 12/31/2024, and 0 for outstanding rollovers and recharacterizations.
- When I review the final 1040 form, it shows line 4a as $6,500 and taxable 4b as $6,500. I expected this to be zero.
Questions:
- Was Form 8606 even filled out correctly for 2023? Reviewing it now, I'm thinking line 4 should have been $6,500 and not have been blank. This should also result in Line 14 being $6,500 as the total basis.
- Do I need to amend this form? If so, I am correct that these changes would not result in any change in tax liability for 2023?
Thank you for your help!
