Backdoor Roth IRA conversions for 2022 and 2023 done in 2023

[Andreasy]

I started making Backdoor Roth IRA contributions to my Roth IRA last year. Before the tax deadline for 2022, in early April,  I made a $7000 after tax contribution to the IRA to be converted into Roth for tax year 2022 and then a $7500 after tax contribution to be converted into Roth for tax year 2023. I got a form 1099R from the IRA declaring both distributions for 2023 as $14,500. When I enter this 1099R In Turbotax I answer the question that I moved money to another retirement account, then that I did a combination of rolling over, converting or cashing out the money, and finally that I converted the full amount  ($14,500) to a Roth IRA.  When I check 1040 line 4a, IRA distributions, is $14,500 and line 4b, Taxable amount, is $7,000. The $7,000 was a conversion for tax year 2022. I shouldn't owe any taxes. I already paid my taxes on this money and I am using the IRA to Roth conversion allowed. It seems the problem is that I made both contributions in one tax year but this allowed. How do I fix this? Do I need to file an amendment to my 2022 taxes? Even if I do, how does that take care of my 2023 taxes? It seems to me that to do this cleanly the financial institution should give me a 1099R for 2023 showing a distribution of $7,500 and another 1099R for 2022 showing a distribution of $7,000.

[DanaB27 · Accepted solution]

You should have a 2022 Form 8606 with a $7,000 from when you entered the nondeductible contribution on your 2022 tax return. This basis is entered during the interview (steps 9 & 10 during the IRA contribution interview or steps 11 & 12 during the retirement interview).

To enter the nondeductible contribution to the traditional IRA for 2023:

1. Open your return
2. Click “Deductions &Credits” on the top
3. Click "I'll choose what to work on"
4. Scroll down to “Traditional and Roth IRA Contributions” and click “Start”
5. Select “traditional IRA”
6. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
7. Enter the amount you contributed $7,500
8. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
9. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had nondeductible contributions before this tax year
10. Enter your basis in the Traditional IRA from your 2022 Form 8606 line 14 (since you had a $7,000 basis for 2022)
11. 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 conversion: 

1. Click "Federal Taxes" on the top and select "Wages & Income"
2. Click "I'll choose what to work on"
3. Scroll down and click "Start" next to "IRA, 401(k), Pension Plan (1099-R)" 
4. Answer "Yes" to the question "Did You Have Any of These Types of Income?"
5. Click "I'll Type it Myself"
6. Choose "Form 1099-R, Withdrawal of Money from 401(k) Retirement Plans, Pensions, IRAs, etc."
7. Click "Continue" and enter the information from your 1099-R
8. Answer questions until you get to “What Did You Do With The Money” and choose “I moved it to another retirement account”
9. Then choose “I did a combination of rolling over, converting, or cashing out money.” and enter the amount next to "Amount converted to a Roth IRA account"
10. On the "Your 1099-R Entries" screen click "continue"
11. Answer "yes" to "Any nondeductible Contribution to your IRA?" since you had a nondeductible contributions for 2022.
12. Answer the questions about the basis from line 14 of your 2022 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

[free4tmp]

Thank you DanaB27

I followed your suggestion, unfortunately  I got 1040 4b)= $7100 and $7100 for excess contribution to withdraw :(

Seems I did not understand IRA Basis, always confused by those concepts 

[jingli]

same here. anyone can help?

[DanaB27]

Please, make sure that you do not select that you moved the funds to a Roth IRA in the IRA contribution section (this is for recharacterizations). If you converted the funds in 2023 you should have a 2023 Form 1099-R with code 2. You will enter this into TurboTax. If you had a basis on the 2022 Form 8606 line 14 then enter this after you entered all your Form 1099-Rs when TurboTax asks “Any Nondeductible Contributions to Your IRA?”.

Please review the steps here: How do I enter a backdoor Roth IRA conversion?

@free4tmp 

@jingli Please review the instructions. If you need additional help then please provide more details.

[ineedhelpwithtaxes]

So i have a similiar situation and want to make sure im doing this correctly:

To enter the nondeductible contribution to the traditional IRA for 2023: - I did this part no issues.  My contributions were slightly different ($6,000 in 2022 and $6,500 in 2023)

To enter the 1099-R conversion:  - My issue with this portion is my 1099-R mentions $12,500.  I know i need to fill out a form 8606 for 2022 as I dont believe that was filed in 2022.  Even though my 1099-R mentions $12,500 do I enter that into the box 1 and 2A?  Then in the step of "What did you do with the money", the amount converted to Roth IRA should be $12,500 again?  I wasn't sure in these steps if I needed to change to $6500 instead?  Thanks

[DanaB27]

Yes, you will enter the Form 1099-R as shown and the amount converted should be $12,500.

After you entered all Form 1099-Rs you will need to click continue to enter your $6,000 basis from 2022 when TurboTax asks “Any Nondeductible Contributions to Your IRA?”

"If the 2022 Form 8606 isn't included in your 2022 return, you'll need to fill out a 2022 Form 8606 to record your nondeductible basis for conversion, and mail this form to your designated IRS office. Don’t amend your 2022 return to record your basis. 

Note: If you're required to file Form 8606 to report a nondeductible contribution to a traditional IRA, but don’t do so, you’ll be subject to a $50 penalty. This penalty can be waived if you can show reasonable cause." (FAQ)

@ineedhelpwithtaxes