Backdoor Roth IRA reporting for 2022 in 2023

[sr_221]

My wife did a backdoor Roth in 2022 for year 2021 by contributing $6,000 to her Traditional IRA in February and then converting it into Roth. If she doesn't do a backdoor Roth for 2022, how does she need to report the conversion in 2022 (for 2021) in 2023 taxes? Does she need to report contributing $6k to her traditional IRA in 2023 taxes?

Secondly, if she decides to do another backdoor Roth for 2022, does she need to report contributing $6k or $12k in her traditional IRA? How would she report taxes in case she makes another contribution?

[DanaB27]

She should have reported the nondeductible traditional IRA contribution for 2021 on the 2021 tax return. TurboTax should have created the 2021 Form 8606 with the basis on line 14 to enter into the 2022 tax return. 

If she moved the funds from the traditional IRA to Roth IRA in 2022 (conversion) then she should have gotten a 2022 Form 1099-R which has to be entered into TurboTax for the 2022 tax return with the steps below. If she only converted the contribution from 2021 then Form 1099-R should show $6,000 (assuming there were no earnings or losses). If she converted the contributions for 2021 and 2022 in 2022 then her Form 1099-R should show $12,000 (assuming there were no earnings or losses).

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 "Review your 1099-R info" 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 2021 Form 8606 ($6,000) and the value of all traditional, SEP, and SIMPLE IRAs

If she makes a $6,000 nondeductible contribution for 2022 then she will enter it with these steps into TurboTax for the 2022 tax return:

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 $6,000
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” if you had a nondeductible contribution before this tax year.
9. Enter your basis in the Traditional IRA from your 2021 Form 8606 line 14 (if you had a basis in the prior year)
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).

If she didn't convert the contribution for 2022 in 2022 then she will have a $6,000 basis on the 2022 Form 8606 line 14 to carry over to 2023. 

[sr_221]

@DanaB27 Thank you so much, this is very helpful. So my situation is slightly different - I did a backdoor Roth contribution and conversion in Feb 2022 for 2021 and then made another contribution in December 2022 for 2022. Can you please advise on how I can correctly enter my back door Roth contributions? Thank you so much for your incredible help!

Is there a service that Turbotax provides for desktop version form review? 

[DanaB27]

You should have reported the nondeductible traditional IRA contribution for 2021 on the 2021 tax return. TurboTax should have created the 2021 Form 8606 with the basis on line 14 to enter into the 2022 tax return. 

You will enter your nondeductible traditional IRA contribution for 2022 on your 2022 tax return (and can enter your basis from 2021 in step 7 and 8 if not automatically carried over):

1. Click on "Search" on the top right and type “IRA contributions” 
2. Click on “Jump to IRA contributions"
3. Select “traditional IRA”
4. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
5. Enter the amount you contributed
6. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
7. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contribution before this tax year.
8. Enter your basis in the Traditional IRA from your 2021 Form 8606 line 14 (if you had a basis in the prior year)
9. 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 your conversion made in 2022:

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 "Review your 1099-R info" 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 2021 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

If you didn't convert the December contribution for 2022 in 2022 then you will have a basis on Form 8606 line 14 to carry over to 2023.

We have TurboTax Live for TurboTax Online customers only, but you can send us a “diagnostic” file that has your “numbers” but not your personal information and I could review your backdoor entries.

 If you would like to do this, here are the instructions for TurboTax Download: 

1. On your menu bar at the very top, click "Online"
2. Select "Send Tax File to Agent"  
3. Click "Send"
4. The pop-up will have a token number
5. Reply to this thread with your Token number. This will allow us to open a copy of your return without seeing any personal information.  

@sr_221 

[sr_221]

@DanaB27 - thanks so much for all your help - I greatly appreciate it. The token number is: 1091953

To summarize, I did a backdoor Roth contribution and conversion in Feb 2022 for 2021 and then made another contribution in December 2022 for 2022.

My wife made a contribution last year in Feb for 2021 and made another contribution this month for 2022. 

[DanaB27]

Thank you. I reviewed your token and you entered the backdoor Roth transactions correctly for you and your wife.

TurboTax will carry your wife's $6,000 basis from line 14 to your 2023 tax return. But it is always a good idea to verify that it does get carried over when you file your 2023 tax return next year.

@sr_221 

[sr_221]

@DanaB27 - thanks a lot!