Backdoor Roth recharacterization question

[Chelseafan24]

There are various similar posts to this and I feel I've done the math and work correctly but I want to make sure 100%.

I contributed $6,000 into a Roth IRA in Feb 2022. In Jan 2023, I realized my income was too high. I rechar $5,XXX to a traditional IRA. A few days later, I backdoor converted to a Roth IRA $5,XXX. In February 2023, contributed $6,500 to a traditional IRA and correctly did a backdoor conversion of that to a Roth IRA a few days later.

My 8606 for 2022 was filed quite wrong I think. 

I am planning to file an amendment of my 2022 8606 form as such (after reading many posts I think I have this right):

1. $6,000

2. $0.00

3. $6,000

14. $6,000

17 and 18 BLANK as I did not do the conversion in 2023.

I will file a 1040 along with an explanation of the recharacterization in addition for 2022.

After my 2023 conversion, I still have $.76 in my traditional IRA account. That will count for the additional $1 in some answers below.

I would then file my 2023 8606 as such:

1. $6,500

2. $6,000

3. $12,500

5. $12,500

8. $12,501

9. $12,501

10. x 0.999

11. $12,500

13. $12,500

14. $0.00

17. $12,501

18. $12,500

19. $1

After some additional reading, I may remove the $1 from those answers and convert that $1 next year when I contribute again. Let me know what you think and if I'm correct. Appreciate any and all help. 

[dmertz · Accepted solution]

What you listed correctly describes what should be appearing on your 2022 Form 8606.

Note that when you recharacterized your 2022 Roth IRA contribution you recharacterized $6,000, not $5,xxx.  $5,xxx was the amount transferred, not the amount recharacterized.

With $0.76 in traditional IRAs on December 31, 2023 you should have $1 on line 6 which will cause slight changes to what you posted for lines after line 6.  Line 8 would have only $12,500 if your February conversion was only $6,500.

[Chelseafan24]

Thank you for the swift reply! It is much appreciated.

I have a couple of questions remaining. Line #2 would stay $6,000 because that it what I previously contributed versus $6,001 after the gains this year. Also, line 4 would stay $0 correct? I am confused because I did the rechar / back door conversion for 2022 in the time frame of Jan 1, 2023 - Apr 15, 2023.

Here is what I have come to now:

1. $6,500

2. $6,000

3. $12,500

4. $0

5. $12,500

6. $1.00

8. $12,500

9. $12,501

10. x 0.999

11. $12,500

13. $12,500

14. $0.00

17. $12,500

18. $12,500

19. $0.00

My overall confusion now lies with the outstanding $1.00 in the tIRA. Do I need to pay tax on that with a separate form? I know in the future I can just convert all of the earnings but I am too late this year with the market closed until Tuesday. Thanks again!

[dmertz]

There is no tax on anything that remains in the traditional IRA until it is distributed from the traditional IRA.  When you make a traditional IRA contribution for 2024 and subsequently convert everything in 2024, it will be included on your 2024 Form 8606 as part of your Roth conversion.