Backdoor Roth for Prior Year Conversion and Filing

[AnnieBoyz]

Many thanks in advance for any assistance for this issue.  I have tried to find answers to my questions, but I haven't been able to find something that is consistent and clear. 

In Jan 2023 I made a $6k contribution to my Trad-IRA for what I intended to be for the prior year (2022), and then converted it a few days later via backdoor to Roth.  In Aug 2023 I made a $6.5k contribution to the Trad-IRA for what I intended to be for 2023 and then converted it a few days later via backdoor to Roth.  (The Trad-IRA balances were $0 after each conversion)

I did not receive any documents for tax year 2022 to document that conversion.  I did receive a 5498 for 2022 that shows my 6k contribution into the Trad-IRA (which was sent to me in May 2023, AFTER tax filing), but I did NOT receive a 1099-R for 2022 to document the conversion.

For 2023 I received a 1099-R which shows a $12500 rollover into my Roth with distribution code "2" and a 5498 for the Roth which shows a $12.5k conversion. The 5498 for 2023 for Trad-IRA shows I contributed $6.5k.

So....

1.  Are the rules for conversion and contribution different?   A quick search suggests I cannot make a conversion for 2022 after Dec 31 2022, even though the brokerage advertised that I could make a "contribution for the prior year."  I presume this means a direct contribution is different than a conversion, with different deadlines???

A quick online search seems to suggest this is the case, but  this particular TT positing makes references that there is  a way to address conversion made for prior years, so Im not sure if there actually is a difference in deadlines between conversions and contributions:

https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-benefits/enter-backdoor-roth-...

2.  I looked through the instructions on the above link....so would there be a way on TurboTax to ensure the IRS knows  that despite the 1099-R for 2023 showing a 12.5k rollover into Roth, that 6k of that 12.5k rollover shown on the 1099-R for 2023 is for 2022, not 2023?  What would I show on 8606 for the 2023 return?

3. As the link suggests, is it really as straightforward as filling out a 8606 for 2022 and mailing it to them?  There is no other correction I need to make on my 2022 1040?  And if so, can I do this though TurboTax that I will be purchasing for 2023?  For reference I used TT Desktop for 2022. 

4.  If all of the above is moot, and I've truly made a blunder as per question 1 and have inadvertently overcontributed because conversions have different deadlines, Im reading that I could ask for a refund of that excess overcontribution.  But how would the IRS even know on my 2023 return that I have done that?  Would I have the brokerage send me something before the deadline that I would then also file so the IRS knows Im taking corrective action?  Obviously my goal would be ensure compliance so I dont have to deal with the headache of dealing with them in years forward.  

5.  Or is this too complex of an issue for TT to handle and would I just need to hire a TT tax pro to figure this out?

Any help would be much appreciated.  Thanks.

[AnnetteB6]

Let's try to answer your questions one at a time.

1 - Contributions and conversions are different things.  Contributions have limits and deadlines depending on the tax year.  Conversions do not have a limit or a deadline.  You can do a Traditional IRA to Roth IRA conversion anytime for any amount.  But, when the goal is to have money put into your Roth IRA through the 'back door' to work around the AGI limits for contributing directly to the Roth IRA, most people contribute to the Traditional IRA and immediately covert it to a Roth IRA.  This is not because there is a deadline, but it is to avoid having the Traditional IRA generate earnings before the conversion because the earnings would be taxable.

2 - For your 2023 return, your Form 8606 should show a total Traditional IRA basis of $12,500.  Line 1 will show $6500 and line 2 will show $6000.

3 - Yes, the directions in the link telling you how to correct and file the 2022 Form 8606 is accurate.  You can open your 2022 TurboTax program and open your tax return.  Then go to Forms mode, click Open Form in the upper left corner and search 8606.  Click on the 8606 and use the Print button at the bottom of the screen to print it.  The heading of the form should already include your information.  Or, use this link to print the Form 8606 from the IRS:  2022 Form 8606

4 - No blunder has been made.

5 - TurboTax can handle it.  The key is to follow the instructions when entering the information into your tax return.  For reference, here is the link to the instructions once again:

How do I enter a backdoor Roth IRA conversion?
 

[dmertz]

"I did not receive any documents for tax year 2022 to document that conversion."

That's because you had no 2022 conversion.  Conversions occur in  a particular year, not for a particular year.

Contributions and conversions are separate transactions.  The $6,000 nondeductible traditional IRA contribution was reportable on a 2022 Form 8606, resulting in $6,000 on line 14 of that form that carries forward to line 2 of your 2023 Form 8606.  That gets added to the $6,500 contribution on line 1 of the 2023 Form 8606 to give you a total on line 3 of $12,500 to be used in calculating the taxable amount of your 2023 Roth conversion(s).

Apparently you failed to report the nondeductible traditional IRA contribution made for 2022, so you need to amend your 2022 tax return to include the required Form 8606 and send that along with Form 1040-X where you'll provide your explanation for filing the form now.