Backdoor Roth - Transaction in 2023 for 2022

[daydreamer]

Hi - Would love some guidance.  

In 2022 I made 2 $6k contributions to a Traditional IRA and converted it to a Roth IRA.  One on 1/6/23 and one on 1/12/23.  I was intending for the first $6K contribution to be for the 2022 tax year and the 2nd contribution for the 2023 tax year.  

I now received a CP2000 and the $6K is being taxed as retirement income.  How can I correct this?

Thank you

[Opus 17]

@dmertz  please...

Questions. 

1. Are you sure the 1/6/23 contribution was recorded for 2022?  Check your 2022 form 5498 from the IRS custodian.

2. You should have a form 8606 as part of your 2022 return showing a $6000 non-deductible contribution.  Is that correct?

3. It sounds like you should have gotten a single 1099-R for 2023 showing a $12,000 withdrawal (plus any gains).  Is that correct?  What code is in box 7?

4. You should have reported the conversion on form 8606 as part of your 2023 tax return, that shows the $6000 prior non-deductible basis, the $6000 new non-deductible contribution, and the conversion.  Is that correct?

5. If the 1/6/23 contribution (for 2022) was non-deductible, do you have a form 8606 on your 2022 return?

If the 2022 contribution (made 1/6/23) was tax-deductible, then the conversion would be taxable and you owe the tax.  However, if it was supposed to be a non-deductible contribution and you failed to report it correctly on your 2022 return using form 8606, then the conversion will be taxable according to the IRS because you did not properly document that it was non-deductible.  In this case, the answer is to prepare amended tax returns for 2022 showing the non-deductible contribution along with a letter of explanation. (The 2023 return might or might not need to be amended too.)

But we need some more answers. 

[dmertz]

As Opus 17 suggests, absent the contribution that was intended to be made for 2022 mistakenly being made for 2023 (with the traditional IRA custodian recording it as a 2023 contribution by default), this response from the IRS would result from either filing an incorrect 2023 Form 8606 or failing to file a 2022 Form 8606 claiming a nondeductible traditional IRA contribution for 2022 (or both).