Backdoor Roth performed but not needed due to AGI

[Dan03]

Hi, I contributed $6,000 on 2/17/2021 to a traditional IRA account for the 2020 tax year. I then moved That $6,000 to my Roth IRA two days later to perform the backdoor Roth conversion. It turns out that our AGI was just under the Roth income limit of $196,000. Can I avoid going through the backdoor forms this year and treat this like a normal Roth contribution?

[DanaB27]

No, since you converted the money already your financial institute will issue a 2021 1099-R in 2022 for the conversion.

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

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 contributions before this tax year.
8. If you had a basis in the Traditional IRA before then enter the amount.
9. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount.

Next year on your 2021 tax return you will enter the 1099-R for the 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 “What Did You Do With The Money” and choose “I moved it to another retirement account”
5. 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"
6. On the "Your 1099-R Entries" screen click "continue"
7. Answer "yes" to "Any nondeductible Contribution to your IRA?"
8. Answer the questions about the basis and value

[fanfare]

don't take your IRA actions until after Dec 31 so you know what your AGI will be.