1099-R mistake due to late backdoor Roth conversion in past year

[laske]

Hi, 

Me and my wife are filling jointly. Here is the timeline for our IRA contributions and roth conversions.

For 2019 Contributions

* My IRA contribution - 06/2019

* Roth Conversion - 06/2019 (immediately)

* Wife's IRS contribution - 01/01/2020 

* Wife's Roth conversion - 02/2020

When I filed 2019 taxes, we missed to report the conversion from my wife's account for 2019 as 1099-R didn't have it yet.

In 2020

We did the contribution and conversion for both me and my wife in 06/2020 and did immediate conversion.

As per 2020 1099-R for my wife, there is 12,000 distributions on Roth IRA and it is flagging that we have to pay 6% penalty every year due to excess contribution. 

How we can adjust it so that the contribution and conversion both for 2020 is at 6000 instead of 12,000 as per 1099-R.

Thanks

[macuser_22]

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@laske wrote:

Hi, 

Me and my wife are filling jointly. Here is the timeline for our IRA contributions and roth conversions.

For 2019 Contributions

* My IRA contribution - 06/2019

* Roth Conversion - 06/2019 (immediately)

* Wife's IRS contribution - 01/01/2020 

* Wife's Roth conversion - 02/2020

---

The wife's 2019 contribution made in 2020 *for* 2019 could only be reported on your 2019 tax return as a non-deductible contribution that would produce a 2019 8606 form with the contribution on line 1,3 and 14.

You only enter 2020 contributions on the 2020 tax return.

When doing the 2020 conversion the 2020 contribution entered in the IRA contribution section will be applies to a 2020 8606 line 1 and the 2019 contribution that you enter in the 1099-R interview comes form line 14 on the 2019 8606 form.

[laske]

Thank you for your reply.

Regarding this part of the reply , "the 2019 contribution that you enter in the 1099-R interview comes form line 14 on the 2019 8606 form." 

1. I did not see a way to add 2019 contributions during 1099-R interview but only for 2020. How do I get to that part?  

2. Since I did not report wife's IRA contribution in 2019, it is not there in 8606 form (it has only 6000, instead of 12,000). Do I need to amend that form for 2019 first then?

Thanks again for your reply. 

[macuser_22]

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@laske wrote:

Thank you for your reply.

Regarding this part of the reply , "the 2019 contribution that you enter in the 1099-R interview comes form line 14 on the 2019 8606 form." 

1. I did not see a way to add 2019 contributions during 1099-R interview but only for 2020. How do I get to that part?  

2. Since I did not report wife's IRA contribution in 2019, it is not there in 8606 form (it has only 6000, instead of 12,000). Do I need to amend that form for 2019 first then?

Thanks again for your reply. 

---

Yes you need to amend 2019 and add the contribution and mark ti non-deductible to generate the 2018 8606 form.   You are not allowed to apply that to 2020 unless the 2019 8606 was filed.

When you enter your 2020 1099-R for the conversion:

You will be asked of you had and tracked non-deductible contributions - say yes. The enter the amount from the last filed 8606 form line 14 if it did not transfer. Then enter the total value of any Traditional, SEP and SIMPLE IRA accounts that existed on December 31, 2020.

That will produce a new 8606 form with the taxable amount calculated on lines 6-15 and the remaining carry-forward basis on line 14.

NOTE: If there is an * next to line 15 then 6-15 will be blank and the calculations will be on the "Taxable IRA Distributions worksheet instead.