How do I report postponed contributions to backdoor Roth on my taxes?

[Op118]

I live in California where, due to the disaster relief designation this year, we don't just get to file by Oct 16, we also get to make IRA contributions until then.

But I'm really confused how to report it in my taxes. I'm trying to do a backdoor Roth IRA. I funded the traditional IRA with $6000 last week at Fidelity and had them reclassify it as a 2022 postponed contribution. They told me to report it on the 2023 taxes with Form 5498 (boxes 13a-c).

Does that mean I just file my taxes for 2022 without mention it at all? Or do I still need to file form 8606 for 2022? This is all very new to me -- I've never had an IRA before, I've never done a Roth conversion and this postponed business is making things even more complicated for me. Help?

[fanfare]

 Vanguard has to accept your designation of your contribution as for 2022 up until Oct 16 because IRS has extended the deadline for IRA contributions.

You should confirm with TurboTax  Vanguard that they did that according to your instructions.

You have one business day to get them on the phone and confirm they asssigned to the year you wanted

If your contribution is for 2022, report it on your 2022 tax return and tell TurboTax you do not want a deduction.

That will generate Form 8606.

The conversion goes on your 2023 tax return.

If Vanguard screwed up,  it will all go on your 2023.

It doesn't really make any difference either way.

[fanfare]

You can e-File now without Form 8606

and, if necessary,  add it later with a 2022 Form 1040-X.

@Op118 

[fanfare]

It does make a big differenec if you planned to contribute for 2022 and for 2023.

@Op118 

[dmertz]

"They told me to report it on the 2023 taxes with Form 5498 (boxes 13a-c)."

@Op118 , you misunderstood.  Fidelity will be reporting it on a 2023 Form 5498, but you must report this $6,000 contribution made for 2022 on your 2022 tax return.  If the contribution is nondeductible it must be reported on line 1 of your 2022 Form 8606.  The resulting line 14 of your 2022 Form 8606 will carry forward to line 2 of your 2023 Form 8606.

You must report the Roth conversion performed in 2023 on your 2023 tax return by entering the 2023 From 1099-R that you will be receiving near the end of January 2024.

[Op118]

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@fanfare wrote:

 Vanguard has to accept your designation of your contribution as for 2022 up until Oct 16 because IRS has extended the deadline for IRA contributions.

You should confirm with TurboTax  Vanguard that they did that according to your instructions.

You have one business day to get them on the phone and confirm they asssigned to the year you wanted

If your contribution is for 2022, report it on your 2022 tax return and tell TurboTax you do not want a deduction.

That will generate Form 8606.

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Thank you so much for your reply. I have their (Fidelity btw) confirmation and I can see that it's classified as 2022 in the web portal, so I'm not concerned about this part. I do plan on contributing for 2022 and 2023. So I'm guessing the best way is to report it on form Form 8606 now?

[Op118]

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@dmertz wrote:

"They told me to report it on the 2023 taxes with Form 5498 (boxes 13a-c)."

@Op118 , you misunderstood.  Fidelity will be reporting it on a 2023 Form 5498, but you must report this $6,000 contribution made for 2022 on your 2022 tax return.  If the contribution is nondeductible it must be reported on line 1 of your 2022 Form 8606.  The resulting line 14 of your 2022 Form 8606 will carry forward to line 2 of your 2023 Form 8606.

You must report the Roth conversion performed in 2023 on your 2023 tax return by entering the 2023 From 1099-R that you will be receiving near the end of January 2024.

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Oh, okay. Yes, I did misunderstand that! Thank you for clarifying that! 👍

So here's what I did in Turbotax: When asked: 

"Did [you] Contribute To a Traditional IRA?

Tell us if [you] made a contribution to a traditional IRA for 2022.

Note: Answer Yes if you plan to make a regular contribution by April 18, 2023, or if you contributed to a traditional IRA and later transferred some or all of that money to a Roth IRA."

I answered 'yes'. It's technically not true to the letter of the word, but I'm assuming that for me October 16 counts as April 18 and it's just not implemented in the software.

Also, for the following prompt:

"Tell us how much of the above total contribution for 2022 you contributed between January 1, 2023 and April 18, 2023."

I entered the full amount of $6000, even thought, again, it's not true to the letter but (I think) to the spirit. 

This seems to generate form 8608 correctly in the way you described with $6000 in line 1 and 14. I need to look through the entire return more carefully to make sure the way I  slightly 'fudged' it in the turbotax software does not carry over any fudging in the actual returns, but other than that I think I should be good.

Again, thank you for your help!

[dmertz]

Yes, all correct.

[Op118]

Great, thanks!