How to enter a Backdoor Roth conversion in 2020 for 2019 taxes

[brgeren]

I converted $5500 in 2019 and received that info in a 1099-R.  I discovered the limit went up to $6000.  I also found more money and wanted to put $6000 in for my wife.  My wife and I both have $0 in our Traditional IRAs because I have previously done the Backdoor Roth for both of us.  So I'm wondering if I put $500 more into my Traditional and convert to a Roth, plus $6000 into my wife's Traditional and convert to Roth, all for the 2019 tax year (but money actually moved in 2020), how do I enter that into TurboTax since I will not receive a 1099-R for the transactions in the 2020 calendar year (2019 tax year)?

[macuser_22]

It does not effect 2019 at all other than being a 2019 non-deductible contribution (assuming that is is non-deductible) that will be reported on the 2019 8606 form as a contribution made between Jan 1, 2020 and Apr 15, 2020 on line 4 that will not affect your 2019 backdoor Roth since it will not apply until next year.

While you can contribute to a 2019 IRA up to the limit for 2019 before April 15, 2020 any distribution/conversion done in 2020 is a 2020 transaction reported next year on your 2020 tax return.

[brgeren]

Yes these are all non deductible. I can still do another $6000 in 2020 for 2020 then right?

also, how do I enter the 2019 contribution done in 2020 into turbo tax?  Do I invent my own 1099R, do i update the numbers in the current one, do I override the 8606 manually and just hope the numbers update as needed?

thanks!

[macuser_22]

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@brgeren wrote:

Yes these are all non deductible. I can still do another $6000 in 2020 for 2020 then right?

also, how do I enter the 2019 contribution done in 2020 into turbo tax?  Do I invent my own 1099R, do i update the numbers in the current one, do I override the 8606 manually and just hope the numbers update as needed?

thanks!

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Yes, the 2020 contribution is separate from the 2019 contribution.  You report that on your 2020 tax return.

Enter the 2019 contribution in the IRA contribution section.    It will ask for the total 2019 contribution and then how much of that contribution  was contributed between Jan 1, and Apr 15 2019.

Be sure (if the screen comes up) to indicate that you want it to be non-deductible.  The screen will not come up if it is already non-deductible because of MAGI limitations.

This will automatically produce a 8606 for with the 2019 contribution  on line 1 & 4.

This will not affect any 2019 1099-R whatsoever.   That non deductible amount while *for* 2019 cannot be used to offset any 2019 tax since it was not actually in the account in 2019.  It will be there for a future distribution.  That is why it is also on line 4 on the 8606 which prevents it from offsetting any 2019 distributions.

Enter IRA contributions here:
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),
Retirement & Investments,
Traditional & Roth IRA contribution.

OR  Use the "Tools" menu  (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.

Be sure to indicate which spouse the contribution is for.

[macuser_22]

Note: above post edited to add information.

[brgeren]

Perfect, thanks for your help!  My confusion was that I was trying to enter those contributions when looking at the income (1099R) screens, and not the deductions for IRA contributions.  Thank you!

[brgeren]

So I'm having trouble now with my wife's conversion.  I put $6000 into the Traditional and converted it all to the Roth.  However, looking at the TurboTax 8606 for my wife, it has:

Line 1 - $6000

Line 2 - $0

Line 3 - $6000

Line 4-13 - Empty

Line 14 - $6000

Shouldn't there be some values on line 4 at least since this was a Roth conversion?  What did I miss that caused Line 4 to be skipped?  I never saw a part that asked if I did a Roth conversion?

Thanks again!

[macuser_22]

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@brgeren wrote:

So I'm having trouble now with my wife's conversion.  I put $6000 into the Traditional and converted it all to the Roth.  However, looking at the TurboTax 8606 for my wife, it has:

Line 1 - $6000

Line 2 - $0

Line 3 - $6000

Line 4-13 - Empty

Line 14 - $6000

Shouldn't there be some values on line 4 at least since this was a Roth conversion?  What did I miss that caused Line 4 to be skipped?  I never saw a part that asked if I did a Roth conversion?

Thanks again!

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The 8606 line 4 is how much of the 2019 contributions were contributed in 2020.

Exactly when did you contribute to your spouses IRA and when did you do the conversion?

You should have a 1099-R for your wives distribution with the IRA/SEP/SIMPLE box checked.  The interview should ask what you did with the money - you say it was moved to another retirement account and then it was converted to a Roth IRA.

[brgeren]

I moved $5500 in 2019 from my checking to my traditional to my Roth. Then another $500 last week following the same pattern. I moved all of my wife’s money last week from checking to her traditional to her Roth.   There is no 1099R for her accounts since all the money was moved in 2020. 

[Anonymous]

I have same issue; Even though I indicate that money was contributed between January 1, 2020 and July 15,2020 - Line 4 on form 8606 is empty.

Also, After clicking on Traditional and Roth IRA Contributions > Next screen gives me 3 options.

1 - Traditional IRA

2- Roth IRA

3- None of the above.

Since I do not have 1099-R, do I select option 1 only or do I select both option 1&2.

Thanks

[macuser_22]

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@Anonymous wrote:

I have same issue; Even though I indicate that money was contributed between January 1, 2020 and July 15,2020 - Line 4 on form 8606 is empty.

Also, After clicking on Traditional and Roth IRA Contributions > Next screen gives me 3 options.

1 - Traditional IRA

2- Roth IRA

3- None of the above.

Since I do not have 1099-R, do I select option 1 only or do I select both option 1&2.

Thanks

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Unless you had a distribution then line 4 is supposed to be empty according to the 8606 instructions below line 3.

[SoCalJake]

Same situation. 

2020 backdoor roth ira conversion. Numbers don't seem to be populating on the forms correctly. 

TurboTax, this is clearly something that has been giving users grief for the last several years. Please make this conversion process easier to report!

[macuser_22]

The "Backdoor Roth" does not exist in tax law. It is a procedure used by some to take advantage of a quirk in tax law that allows making a non-deductible contribution to a Traditional IRA when one cannot contribute to a Roth IRA, and the immediately converting the Traditional IRA to a Roth IRA, thereby getting the money into the Roth via "backdoor".

That "procedure" can only work of all these requirements are met:
1) No Traditional IRA account whatsoever can exist (that includes any SEP or SIMPLE IRA accounts) at the start.
2) The Tradition IRA contributions must be reported on a 8606 form as non-deductible.
3) The conversion to a ROTH must be shortly after the contribution to avoid taxable gains.
4) The entire Traditional IRA value must be zero that the end of the year of conversion.

Otherwise the conversion will be partly taxable.

First you must enter your Traditional IRA contributions (if there were 2019 contributions).

IRA contribution
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),,
Retirement & Investments,
Traditional & Roth IRA contribution.

Be SURE to answer the follow up that the are choosing to make this contribution NON-DEDUCTIBLE - if that screen comes up. (DO NOT say that you moved (recharacterized) the money to a Roth) – this is a conversion, not a recharactorazition.

Then enter the 1099-R that shows the distribution.

Federal Taxes,
Wages & Income
I’ll choose what I work on (if that screen comes up),,
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

Answer the follow-up questions answer the question that you moved the money to another retirement. The screen will open up with choices of where it was moved. Choose you converted it to Roth IRA.

When asked if you have made any non-deductible contributions say " "yes" if you did then enter the non-deductible contributions made for tax years before 2019.     (Usually zero unless you also made a 2018 or earlier non-deductible contribution. If you do have prior year basis then enter the last filed 8606 line 14 value.).

Enter the 2019 year end value of your Traditional IRA a "0" (zero) - if it is in fact zero - this tax free Roth conversion will not work if it is not zero.

[If you had any other Traditional IRA at the end of 2019, then the nondeductible "basis" must be pro-rated over the current distribution and the total IRA value and only a portion of the Roth conversion will be non taxable and part will be taxable, with the remaining non-deductible basis carrying forward for future distributions. You can never only withdrew the nondeductible basis as long as the IRA exists and has a value more than zero.]

The non-deductible amount of your contribution will be subtracted from the taxable amount of the conversion on then 8606 form and enter on line 4a of them 1040 form and a zero taxable amount on line 4b if you did it right.

Also see this TurboTax FAQ:
https://ttlc.intuit.com/questions/4350747-how-do-i-enter-a-backdoor-roth-ira-conversion

[SoCalJake]

2020 backdoor roth ira conversion. Numbers don't seem to be populating on the forms correctly. 

For instance:

1040: Contribution amounts being displayed on line 4c as a "pension and annuity" distribution. 

This doesn't seem correct.

[macuser_22]

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@SoCalJake wrote:

2020 backdoor roth ira conversion. Numbers don't seem to be populating on the forms correctly. 

For instance:

1040: Contribution amounts being displayed on line 4c as a "pension and annuity" distribution. 

This doesn't seem correct.

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That is not correct.    You can only do a backdoor Roth with a Traditional IRA distribution that must have the 1099-R IRA/SEP/SIMPLE box checked.   That is what puts it on the 1040 line 4a & 4b.