2020 Amended Return on 8606

[dannytran01]

Hello!

I need help with 1099-R for a recharacterization event done in 2021 for a 2020 AND that I may have accidentally filled a 8606 when I didn't need to for 2020.

For context:

While doing this year's taxes, I believed I have asked the right question to appropriately fill my 8606 form and ending with a total basis (line 14) of $0. See link for that discussion.

https://ttlc.intuit.com/community/retirement/discussion/re-excess-contribution-penalty-from-recharac... 

However, I believed I have filled my 2020's form 8606 completely wrong. In 2020, I found out too late that I no longer qualified for Roth IRA and I attempted to re-characterized. See the below chart for dates of execution:

However, when filling out my 2020 taxes, I was quite confused and thought I had a basis (I honestly did not know what I was doing then). This is what my 2020 8606 looked like:

Now using TurboTax2020 Premier (Mac), I am attempting to fix this. These are my steps. Would someone kindly help validate if they are done appropriately?

1. Selected 1099-R and entered my re-characterization form that I received in 2021.

2. Navigated to "Deductions and Credits" > "Update" (Button)

3. Searched for "Traditional and Roth IRA Contributions"

4. Selected both "Traditional IRA" and "Roth IRA"

5. Yes -> "Did you Contribute To a Traditional IRA?"

6. No -> "Is This a Repayment of a Retirement Distribution?"

7. "3000" -> "Your total 2020 traditional IRA contribution"

8. "3000" -> "Tell us how much of the above total contribution for 2020 you contributed between Jan 1, 2021 and May 17, 2021"

9. No -> "Did you change your mind?"

10. Yes -> "Retirement Plan Coverage?"

11. No -> "Any Excess IRA Contributions Before 2020?"

12. No -> "Any Nondeductible Contributions to Your IRA?" (Since I only started this for 2020)

13. "0" -> "Value of your Traditional IRAs on December 31, 2020"

14. Yes -> "Did you make a Roth IRA contribution for 2020?"

15.  No -> "Is This a Repayment of a Retirement Distribution?"

16. "3000" -> "Enter Your Roth IRA Contributions"

17. Yes -> "Switch from a Roth To A Traditional IRA?"

18. "3000" -> "Tell Us How Much You Transferred"

19. Roth IRA Explanation Statement:
Date of the Original Contribution: 3/16/2020
Date of the Recharacterization: 02/09/2021
The Amount Recharacterized: $3000.
The Amount Transferred (Recharacterization plus earnings or losses): $4216.04
Reason for the Recharacterization: No longer qualified for Roth IRA

Unfortunately, I bumped into a strange error. It says my IRA contribution isn't permitted.

Also, line 14 in Form 8606-T shows a basis of $6,000. I was expecting "$0". 

So from here,

1. Should I Import my 2020 W-2 then come back to this screen? (I sadly did lose my .tax2020 for importing, but have the .pdf).

2. Correct any steps from 1-19 from above? I am assuming I'm supposed to get "0" from line 14? 

Thank you for your time and input!!!

Danny

[DanaB27]

Yes, you will have to enter your 2020 W-2 on your 2020 tax return because right now TurboTax believes you had no earned income and therefore you would not be allowed to make the contribution.

No, you should have a $6,000 basis on your 2020 Form 8606 line 14 (assuming you had no prior basis left in the traditional IRA from 2019 and earlier). You made the $3,000 contribution to the traditional IRA and you recharacterized another $3,000 to the traditional IRA and made these nondeductible therefore you will have a total of $6,000 on line 14 to carry over to 2021.

It seems you have entered the traditional IRA and recharacterization correctly.