How to Report Backdoor Roth IRA for 2019 in 2020?

[matrix5k]

Hi,

In 2017 I did a backdoor Roth IRA (contributed $5500 to traditional in 2017 and converted to Roth in 2017) and followed these instructions which were great:

https://ttlc.intuit.com/community/retirement/discussion/how-to-report-backdoor-roth-in-turbotax-usin...

In 2018 I did not make an IRA contribution and therefore did not get a 1099R or fill out form 8606.

In 2019, I contributed $5500 to traditional for 2018 and converted to Roth a few days later in 2019. Now I'm not sure how to report this in TurboTax?

For "Any Nondeductible Contributions to IRA?" am I supposed to say Yes?

In the Deductions & Credits Section of "Tell Us How Much You Contributed":

Total 2019 traditional IRA contributions: $5500

Tell us how much of the above total contribution for 2019 you contributed between 1/1/20-4/15/20: If I put $5500 my refund goes way down. If I put 0, that's what my refund is supposed to be.

Am I supposed to ammend my 2018 tax return with a form 8606?

I just did the same for 2019 (contributed $6,000 to traditional in 2020 for 2019 and converted to Roth in 2020). For 2020 I'd like get back on track and contribute $6,000 to traditional in 2020 and convert to Roth in 2020 to avoid this situation from now on.

[MikeinSC · Accepted solution]

You should have completed the 8606 on your 2018 return, it would then have your "basis" set at $5,500.  You can file an amended return to report that. 

Your 8606 for 2019 would add to that basis the 2019 contribution of $6,000.  You then converted $5,500 in 2019 and report that on the Roth conversion section.  This will reduce the basis you will have for the 2020 8606 (which if you get back on making the contribution in the same year, will then use all your basis next year when you report the conversions of both the 2019 and the 2020 contributions.)

[matrix5k]

Thank you! When I amend the 2018 taxes, will I owe more taxes for that year, or will it be a wash after I do 2019 taxes? Do I send only form 8606 or do I need 1040+everything again? Should I wait a few weeks after the amendment before filing 2019?

I plan to make the 2020 contribution late this year to get back on track. Will I need to amend 2019 returns after I do that?

[MikeinSC]

You will not owe any taxes, you are just reporting that you made a non-deductible IRA for 2018.  Put that in the explanation of the amended return.  You include the 1040x and the 8606 - https://www.irs.gov/faqs/irs-procedures/amended-returns-form-1040x

You  should not have to amend 2019 as you are going to report it correctly for this year, showing the prior year basis and the contribution for 2019 even though you made it in 2020.

[matrix5k]

Another question, my address has changed since I filed 2018 taxes. I've already sent in the change of address form separately earlier this year. Do I update the address on my amended return or leave the old one?

[MayaD]

Yes, You should update your address. Always use your current address when filing with the IRS, even if it doesn't match the return you are amending

[matrix5k]

I made the changes and tried to file for 2019 but it says I have to wait until 2/12/20 for Forms 1040: Individual Form 8606-T Nondeductible IRAs and 8606-S Nondeductible IRAs. Are these separate from the normal 8606 form?

[macuser_22]

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@matrix5k wrote:

I made the changes and tried to file for 2019 but it says I have to wait until 2/12/20 for Forms 1040: Individual Form 8606-T Nondeductible IRAs and 8606-S Nondeductible IRAs. Are these separate from the normal 8606 form?

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No.  It is the same form but there is no joint 8606.  There is a separate 8606 for each soiuse on a joint tax return.  The 8606-T is "Taxpayer" ( the first person listed on the tax return), the 8606-S is "Spouse" (the second person listed).

[matrix5k]

Do I have to amend my 2018 return before I can file for 2019?

[DeanM15]

I do not believe you need to amend your 2018 return, based on what you are telling me. You may need to delete some items and start the backdoor Roth entries again.

This is the guide that I use to enter a backdoor Roth into TurboTax. As you know, the idea is to get the entries of the 1099Rs into the program without any tax or penalties. It is a little complicated, but you may be able to meld what you have already done and what the guide says to do. If not, delete the Forms and start from the beginning.

[matrix5k]

@DeanM15 I believe I need to amend my 2018 taxes based on the previous answers above because I never reported that I contributed to 2018 IRA. I did not have a form 8606 for 2018.

In the link you provided, the section that says "Enter the contribution amount. If you contributed in the following year before April 15 for the previous year, enter the contribution in both boxes." is what I need to fill out for 2018 in order to show my basis of $5500 for that year.

Then for 2019 for the section "Let's find your IRA basis" I would carry that $5500 forward.

That is my understanding, please correct me if I'm wrong.