Conversion of deductible IRA to Roth
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goyal_raj
Level 2

Conversion of deductible IRA to Roth

Hi,

I have the following activity for my Traditional and Roth IRA.

11 April 2019- contributed 5500 to 'DEDUCTIBLE' IRA for 2018

24Feb 2020 -Converted 5591 (500 + earnings) to Roth

25 Feb 20 - contributed 6000 to 2019 'NON' DEDUCTIBLE IRA

25 Feb 20- contributed 6000 to 2020 'NON' DEDUCTIBLE IRA

26 Feb 2020 - converted 12000 to ROTH IRA

I am above income limits for Roth IRS so i did a backdoor.

I received a 1099-R at the end of 2020 and it shows the 17592 conversion with distribution code 02. I uploaded it in Turbo tax and have the following results in 8606:

Line 1- 6000 (probably for 2020 IRA contribution non deductible)

Line 2- 6000 - for 2019 non deductible IRA (which was converted to Roth)

Line 8- blank (even though i converted from T IRA to Roth)- is this right?

Line 13- 12000

Line 14- 0 - is this right 

Line 16- 17592

Line 17- 12000 

Line 18- 5592 - makes my deductible IRA conversion taxable which seems right.

 

Question- should it not show 6000 in Line 8 since I converted in 2020?

 

In my 2019 form, it did not show Line 4- contribution made between Jan 2020 and Apr 2020. I did enter this amount in the turbo tax questionnaire. Here is my 2019 form detail:

Line 1- 6000 -for the non deductible contribution

Line 2- 0 - should it not show my 5500 deductible IRA contribution here?

Line 14- 6000 - is this right? 

 

Thanks,

6 Replies
macuser_22
Level 15

Conversion of deductible IRA to Roth


@goyal_raj wrote:

 

Question- should it not show 6000 in Line 8 since I converted in 2020?

 

In my 2019 form, it did not show Line 4- contribution made between Jan 2020 and Apr 2020. I did enter this amount in the turbo tax questionnaire. Here is my 2019 form detail:

Line 1- 6000 -for the non deductible contribution

Line 2- 0 - should it not show my 5500 deductible IRA contribution here?

Line 14- 6000 - is this right? 

 

Thanks,


Looks right.

 

There is probably a * next to line 15 that means the calculations were done on the "Taxable IRA Distribution Worksheet" per IRS instructions for worksheet 1-1 in Publication 590-B.  The conversion amount would be on line 6 on the worksheet.

 

https://www.irs.gov/publications/p590b

 

The 2019 8606 line 4 should be blank per the 8606 instructions after line 3 - if no 2019 distribution, go directly from line 3 to line 14.

 

Line 2 would be blank - deductible contributions do not go on the 8606.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
goyal_raj
Level 2

Conversion of deductible IRA to Roth

Thanks macuser_22. So it is all good then.

How would i get a basis of 17592 for my Roth? which form would show it and when?

Thanks,

 

macuser_22
Level 15

Conversion of deductible IRA to Roth


@goyal_raj wrote:

Thanks macuser_22. So it is all good then.

How would i get a basis of 17592 for my Roth? which form would show it and when?

Thanks,

 


It not a "basis" it is the amount you said you converted to a Roth.

The 1099-R box 1.

 

That is what your question said:

"24Feb 2020 -Converted 5591 (500 + earnings) to Roth"

"26 Feb 2020 - converted 12000 to ROTH IRA"

= $17,591 (I assume if rounded up to 17,592).

 

 

 

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
goyal_raj
Level 2

Conversion of deductible IRA to Roth

Thanks for your reply.

YEs, I got that. My question was that I would also have to maintain a basis for my Roth IRA in case i take early distributions. Where do i see that, if at all on the tax forms? I believe it would be 17592 for me till now.

Thanks,

Rajesh

macuser_22
Level 15

Conversion of deductible IRA to Roth


@goyal_raj wrote:

Thanks for your reply.

YEs, I got that. My question was that I would also have to maintain a basis for my Roth IRA in case i take early distributions. Where do i see that, if at all on the tax forms? I believe it would be 17592 for me till now.

Thanks,

Rajesh


I thought your question was about your wife's IRA,     IRA's are Individual and not combined.  Nothing about *your* IRA goes into it at all.

 

If you wife's IRA was ALL converted then the year end value should be zero for *her* IRA.    That is why the calculations are not working.

 

There are two 8606 forms - a 8606-T (taxpayer) and 8606-S (spouse).  The taxpayer is the person listed first on the tax return.

 

Also be sure that the 1099-R was entered for your wive and not you.  The interview asks which spouse it is for.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
goyal_raj
Level 2

Conversion of deductible IRA to Roth

Thanks for your reply. This specific post was for my contribution only. I understand that it is all separate for the spouses. 

 

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