Reported rollover instead of Roth IRA conversion (2020)

Forum|Forum|4 years ago
March 1, 2022
1 reply
7 views

I incorrectly reported rollover for 2020 tax year, instead of backdoor Roth IRA conversion (all non-deductive contributions). To fix this, do I need to file 1040-X (and 1040) along with 8606? Or will just 8606 suffice? Asking because the original 1040 generated by Turbotax mentions "ROLLOVER" in the space left of 4b (Taxable amount).

DianeW777

Level 15

Yes, you need to complete the 1040-X by amending the tax return for 2020. The IRS will not know exactly what you are amending by filing only the Form 8606. An 8606 does not track the cost basis in a Roth.

How to amend (change or correct) a return already filed? Read all instructions before you begin so that TurboTax knows the original information and the changed information.

Summary of the "Backdoor Roth".

The "Backdoor Roth" does not exist in tax law. It is a procedure used by some to take advantage of a unique part of tax law that allows making a nondeductible contribution to a Traditional IRA when one cannot contribute to a Roth IRA, and the immediately converting the Traditional IRA to a Roth IRA, thereby getting the money into the Roth via "backdoor" tax free.

That "procedure" can only work of all these requirements are met:

No Traditional IRA account whatsoever can exist (that includes any SEP or SIMPLE IRA accounts) at the start. If existing IRA's contain any before-tax money or earnings then it will be partly taxable.
The Tradition IRA contributions must be reported on a 8606 form as non-deductible.
The conversion to a ROTH must be shortly after the contribution to avoid taxable gains.
The entire Traditional IRA value must be zero that the end of the year of conversion.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

whatyearisthisAuthor

Level 2

To clarify, should I only file 1040-X and 8086 or re-file everything Turbotax generates? There is no change to my numbers in 1040-X (column A and C are identical) since the IRA contributions were non-deductible.