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posted Mar 29, 2022 11:39:55 PM

2020 non ded ira cont. in 2021 and a 2021 non ded ira cont. in 2021. converted both to a Roth in 2021. software not recognizing previous years non ded ira cont. how 2 fix

I previously filed with turbo tax previous years and only did one backdoor Roth conversion in a year. now I decided to do two in the same year but for different years.  how do I get the software to understand I shouldn't have to pay any taxes as it currently thinks I owe on the previous years conversion as my 1099 says 12k, my 5498 says 12k converted.  but the software only recognizes the current years non deductible contribution. please help. thank you

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1 Replies
Expert Alumni
Mar 30, 2022 4:39:22 AM

You will have to enter the contribution for 2020 on your 2020 tax return. Please How do I amend my 2020 return? TurboTax will create Form 8606 with a basis on line 14 (nondeductible contribution for 2020) to carry over to 2021.

 

On your 2020 tax return to enter the nondeductible contribution to the traditional IRA:

  1. Login to your TurboTax Account 
  2. Click on "Search" on the top right and type “IRA contributions” 
  3. Click on “Jump to IRA contributions"
  4. Select “traditional IRA”
  5. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
  6. Enter the amount you contributed
  7. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
  8. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (if you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible).

 

 

On your 2021 tax return

 

To enter the nondeductible contribution to the traditional IRA:

  1. Login to your TurboTax Account 
  2. Click on "Search" on the top right and type “IRA contributions” 
  3. Click on “Jump to IRA contributions"
  4. Select “traditional IRA”
  5. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
  6. Enter the amount you contributed
  7. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
  8. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” since you had a nondeductible contribution before this tax year.
  9. Enter your basis in the Traditional IRA from your 2020 Form 8606 line 14.
  10. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (if you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible).

 

To enter the 1099-R distribution/conversion: 

 

  1. Click on "Search" on the top right and type “1099-R”  
  2. Click on “Jump to 1099-R”
  3. Click "Continue" and enter the information from your 1099-R
  4. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
  5. On the "Your 1099-R Entries" screen click "continue"
  6. Answer "yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
  7. Answer the questions about the basis from line 14 of your 2020 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs