How to deal with 2 Backdoor IRA conversions in one calendar year - 2 tax years

[thomsenb]

In Feb 2021 I made a 6000 contribution to a Trad IRA and then do a conversion to a Roth IRA. I had not made any contributions in 2020, so I reported this on my 2020 Taxes. I reported the distribution just based on my statement my my financial company, and then reported the rollover.

However, throughout the rest of 2021 I contributed an ADDITIONAL 6000 to the Trad IRA, and then on Dec 31 converted to the Roth IRA again.  I am trying to file my 2021 taxes.  The 1099-R form I have shows the full 12000 as the distributions. Given that i've already reported 6000 dollars of this total 12000 in distributions on my 2020 taxes, show I just enter a modified amount in the 1099-R field in turbotax?  Or did i screw up my 2020 return and i need to amend it?  

[AnnetteB6]

You need to amend your 2020 return.

When you amend, leave the non-deductible contribution to your Traditional IRA, but remove the distribution and conversion from the Traditional IRA to the Roth IRA.

The contribution to the Traditional IRA was allowed to be completed in 2021 and reported on your 2020 tax return.  The conversion to the Roth IRA was completed in 2021 though.  Therefore, you are getting a 2021 Form 1099-R that is reporting the conversion of the total of your 2020 and 2021 Traditional IRA contributions.  

[thomsenb]

i have worked on this in turbotax, but i still think I'm doing somethign wrong.  It is showing that I have 18000 worth of distributions in 2021.  6000 of these were for the rollover I did for the 2020 year. And then 12000 were the rollover i did for my wife and I did for 2021 (each rolling over 6000 in 2021 from our personal traditional IRAs to our personal Roth IRAs).  

Now it is showing me that:

Traditional and roth IRA distributions = 18000 total.  Which means i have 6000 retirement "income".

However, that 6000 is the distribution that was rolled over in the 2020 period, its not income.    Any guidance here? 

[thomsenb]

I printed out the actual Form 8606 that was generated by Turbotax to follow along the math.

Line 1 - 6000

Line 3 - 6000

Line 4 - 0
Line 5  - 6000

Line 6 - 0

Line 7 - 0

Line 8 - 12000 (this is for 2020+2021)

Line 9 - 12000

Line 10 - 0.5

Line 12 - 6000 (this is the nontaxable portion of your distributions...and later it DOES apply tax to the remaining 6000)

Where should it get factored in that the remaining 6000 rolled over should not be taxable?  It was non-deductable money I put in, and then I converted it. 

[DanaB27]

If you made a contribution to your traditional IRA for 2020 in 2021 then please make sure you reported this on your 2020 tax return and made it nondeductible. This will create Form 8606 for 2020 and you should have the basis of $6,000 on line 14  of Form 8606.

This basis from 2020 you will have to enter on your 2021 tax return. You can either enter it when you enter your 2021 contribution (steps 9 and 10) or when you enter your 1099-R (steps 11 and 12). This basis from prior years will show up on line 2 of your 2021 Form 8606.

To enter the nondeductible contribution to the traditional IRA:

1. Open your return
2. Click “Deductions &Credits” on the top
3. Click "I'll choose what to work on"
4. Scroll down to “Traditional and Roth IRA Contributions” and click “Start”
5. Select “traditional IRA”
6. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
7. Enter the amount you contributed
8. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
9. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had nondeductible contributions before this tax year
10. If you had a basis in the Traditional IRA before then enter the amount.
11. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount.

To enter the 1099-R distribution/conversion: 

1. Click "Federal Taxes" on the top and select "Wages & Income"
2. Click "I'll choose what to work on"
3. Scroll down and click "Start" next to "IRA, 401(k), Pension Plan (1099-R)" 
4. Answer "Yes" to the question "Did You Have Any of These Types of Income?"
5. Click "I'll Type it Myself"
6. Choose "Form 1099-R, Withdrawal of Money from 401(k) Retirement Plans, Pensions, IRAs, etc."
7. Click "Continue" and enter the information from your 1099-R
8. Answer questions until you get to “What Did You Do With The Money” and choose “I moved it to another retirement account”
9. 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"
10. On the "Your 1099-R Entries" screen click "continue"
11. Answer "yes" to "Any nondeductible Contribution to your IRA?"
12. Answer the questions about the basis and value