2019 Taxable IRA Distribution worksheet line 4 (value of your Traditional IRAs as of 12/31/2019

[fermin1952]

I have made non deductible contributions to a Traditional IRA for years prior to 2019 (basis as of 12/31/2018 = $7200), and have never made deductible contributions to the Traditional IRA.

In 2019 I converted 7200 from the  Traditional IRA ( I only have 1 Traditional IRA) to my Roth IRA and also, for tax year 2019,  I am making a non deductible contribution of $6000  to the Traditional IRA in March of 2020.

After the 2019 $7200 withdrawal for the conversion and prior to the $6000 2019 (in 2020) contribution, the Fair Market Value as of   12/31/2019 was $5035 due to stock gains in  the account.

In filling the Taxable IRA Distribution worksheet line 4, should I enter:

a - $5035

or

b - $5035 + 6000 (2019 contribution in 2020) = $11035

The step by step section for the income subject is not specific enough (and this entry is the one used in the calculations), unlike the step by step section for the deduction subject which clearly states tp include the 6000 2019 deduction even if made in 2020

Thank you

[macuser_22]

That worksheet is only used for special circumstances when there is a * (asterisk ) on line 15 on the 8606 form.  The form is not intended to be filled out manually.  If you enter the 1099-R in the interview it will ask for your non-deductible contribution and the 2019 year end value of all Traditional IRA accounts and automatically fill out the 8606 and worksheet if required.

A 2019 contribution made in 2020 will not offset any 2019 conversions and  that goes on the 8606 line 4 and is subtracted from the amount of non-deductible basis for the tax calcification.   Being able to contribute to  2019 in 2020 does not make the non-deductible basis retroactive to 2019 - it is not.    The contribution made in 2020 for 2019 will only offset distributions made in 2020 or later years.

[fermin1952]

Thank you very much for the response. You are correct....that worksheet is populated by TT based on my answers to the step by step instructions for the personal income section for the IRA to Roth conversion/distribution.....

in that income step by step Q/A, right after the question that asks for the IRA Basis there is a question that asks for the value of the Traditional IRA as of 12/31/2019. My question is should I answer that question with my a or b choice per my original post

Thank you again

[fermin1952]

I do have

[macuser_22]

You enter the year end value of the IRA accounts as reported by the IRA custodian on your December 31 statement.

[fermin1952]

so based on my example numbers below from my original post

***********

I have made non deductible contributions to a Traditional IRA for years prior to 2019 (basis as of 12/31/2018 = $7200), and have never made deductible contributions to the Traditional IRA.

In 2019 I converted 7200 from the  Traditional IRA ( I only have 1 Traditional IRA) to my Roth IRA and also, for tax year 2019,  I am making a non deductible contribution of $6000  to the Traditional IRA in March of 2020.

After the 2019 $7200 withdrawal for the conversion and prior to the $6000 2019 (in 2020) contribution, the Fair Market Value as of   12/31/2019 was $5035 due to stock gains in  the account.

In filling the Taxable IRA Distribution worksheet line 4, should I enter:

a - $5035

or

b - $5035 + 6000 (2019 contribution in 2020) = $11035

*****

would the answer be a - $5035 or  b - $11035?

[macuser_22]

---

@fermin1952 wrote:

so based on my example numbers below from my original post

***********

I have made non deductible contributions to a Traditional IRA for years prior to 2019 (basis as of 12/31/2018 = $7200), and have never made deductible contributions to the Traditional IRA.

In 2019 I converted 7200 from the  Traditional IRA ( I only have 1 Traditional IRA) to my Roth IRA and also, for tax year 2019,  I am making a non deductible contribution of $6000  to the Traditional IRA in March of 2020.

After the 2019 $7200 withdrawal for the conversion and prior to the $6000 2019 (in 2020) contribution, the Fair Market Value as of   12/31/2019 was $5035 due to stock gains in  the account.

In filling the Taxable IRA Distribution worksheet line 4, should I enter:

a - $5035

or

b - $5035 + 6000 (2019 contribution in 2020) = $11035

*****

would the answer be a - $5035 or  b - $11035?

---

The 2019 year end balance can not include what was not in the account until 2020.  What does the financial institution report on the year end statement?   That is what they will report to the IRS on a 5498 form and  that is what the IRS goes by.

[fermin1952]

Thank you very much CHAMP for your answer and clarification. I just wanted to  make sure I was not missing something