dmertz
Level 15

Retirement tax questions

Line 14 of the 2015 Form 8606 carries over to line 2 of your 2016 Form 8606 when you transfer in your 2015 TurboTax file.  In 2016 TurboTax, click the Continue button on the Your 1099-R Entries page, make sure that you indicate that you made nondeductible traditional contributions for prior years, then confirm that TurboTax shows your $5,500 basis from prior years.  Also make sure that you've entered your $5,500 nondeductible traditional IRA contribution for 2016 under Deductions & Credits.  TurboTax will sum these amounts on Form 8606 line 9 to be applied against your $10,926 conversion to determine the taxable amount.  The entire conversion will be nontaxable as long as you had no other traditional IRA distributions in 2016 and no other money in traditional IRAs on December 31, 2016.

With the entirety of your balance converted to Roth, you will be left with $74 of unrecoverable traditional IRA basis.  TurboTax will report this on Schedule A line 23, but it's unlikely result in any deduction since it's unlikely to exceed 2% of your AGI.

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