Backdoor Roth IRA form 8606

[NightSky9963]

It appears that the answers to my questions are out there, but I'm still having some trouble understanding.

I maxed out my 2022 Roth IRA contributions of $6,000. In Feb 2023, I realized my wife and I earned above the $214K limit for Roth IRA contributions. My plan is to recharacterize $6,000 of money market fund cash to a new Traditional IRA, then immediately convert that back into Roth. (My $6k contribution for 2022 actually lost about $300, but I recharacterized $6k to ensure no issues with taxable gains and make it a nice number.)

It is my understanding that I need to submit a form 8606 now. Will I fill it in like this?: Line 1: 6000, Line 2: 0, Line 3: 6000, [No to the question about a 2022 Roth IRA conversion?], Line 14: 6000.

And that's it?

I do not anticipate this being an issue for 2023 and plan on continuing direct Roth IRA contributions.

What then will I have to do for next tax season?

[MarilynG1]

TurboTax will generate Form 8606 for you, if:

1) You make a new non-deductible Traditional IRA contribution.
2) You take a distribution from a IRA that has a after-tax "basis".
3) You make a conversion of a retirement account to a Roth IRA

How to Enter a Back-Door Roth Conversion

More info on Form 8606.
 

[dmertz]

"My $6k contribution for 2022 actually lost about $300, but I recharacterized $6k to ensure no issues with taxable gains and make it a nice number."

To recharacterize the entire $6,000 contribution you had to request a recharacterization of $6,000, which it appears that you did.  The Roth IRA custodian should then have transferred $5,700 to the traditional IRA.

Enter the $6,000 Roth IRA contribution in to TurboTax.  In the questions that follow, indicate that you recharacterized $6,000.  TurboTax should ask you to provide an explanation of the recharacterization where you'll indicate that $5,700 was transferred to the traditional IRA due to a $300 investment loss on the $6,000 contribution that was recharacterized.  TurboTax will then treat the $6,000 as a traditional IRA contribution and, being a nondeductible contribution, will include it on Form 8606 line 1 and line 14 as you described.

Because you will also be making a nondeductible traditional IRA contribution for 2023, you can convert everything at once after making your 2023 contribution.  The Roth conversion will be reportable on your 2023 tax return.  The $6,000 from line 14 of your 2022 From 8606 will carry forward to line 2 of your 2023 Form 8606 to be applied in determining the taxable amount of the Roth conversion.  Because you are contributing and converting in the same year, TurboTax will likely use Worksheet 1-1 from IRS Pub 590-B to calculate the nontaxable amount rather than completing lines 6 through 12 of the 2023 Form 8606, indicated by asterisks on lines 13 and 15.