how to report backdoor?

tkenbo · ‎March 10, 2023

Hi, I'm having a difficulty to figure out what numbers to put in for backdoor and I'd appreciate if anyone could help. I'm doing an amendment for 2021 return as I did not file 1099-R for the Roth Conversion held on 2021/03. ($6372)

Here is my situation.

2020/01-2020/12 - Contributed to Roth IRA - $5496.

2021/03 - Recharacterized to Trad IRA - $6338. ($5496 + earning $842)

2021/03 - Converted to Roth IRA back - $6372 and this was total conversion. (Trad IRA balance was $0)

2021/01-2021/12 - Contributed to Roth IRA - $5496.

2022/03 - Recharacterized to Trad IRA - $5705 ($5496 + earning $209)

2022/03 - Converted to Roth IRA back - this goes on 2022 return, so I ignore it here.

Now I added 1099-R for $6372 Roth Conversion and trying to figure out if there should be taxable portion as I had the earnings.

After entering the 1099-R, though questionaries, I found the following page.

As far as I think, $5492 should go in the red box?

At the end of 2021, there was no Trad IRA balance as the conversion for $5705 was held on 2022/03.

Although the amount transferred for the conversion was $5705, number should go in the red box is $5496 since we ignore the earnings? Is this correct? If no, please advise.

DanaB27 · ‎March 10, 2023

Yes, on your 2021 tax return for outstanding recharacterization, you will enter the contribution amount for 2021 that was recharacterized in 2022 in that box, therefore $5,496.

Please make sure that you entered the recharacterization of your contribution for 2020 on your 2020 tax return with these steps:

Login to your TurboTax Account
Click on "Search" on the top right and type “IRA contributions”
Click on “Jump to IRA contributions"
Select “Roth IRA”
Answer “No” to “Is This a Repayment of a Retirement Distribution
Enter the Roth contribution amount
Answer “Yes” to the recharacterized question on the “Switch from a Roth To a Traditional IRA?” screen and enter the contribution amount (no earnings or losses) on the next screen.
TurboTax will ask for an explanation statement where it should be stated that the original $xxx.xx plus $xxx.xx earnings (or loss) were recharacterized.
On the screen "Choose Not to Deduct IRA Contributions" answer "Yes" (if you are thinking about doing a backdoor Roth. If you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible)

You will have a basis on line 14 of your 2020 Form 8606 which will be entered on your 2021 tax return when TurboTax asks if you had a prior year basis.

On your 2021 tax return to report the recharacterization of the contribution for 2021:

Login to your TurboTax Account
Click on "Search" on the top right and type “IRA contributions”
Click on “Jump to IRA contributions"
Select “Roth IRA”
Answer “No” to “Is This a Repayment of a Retirement Distribution
Enter the Roth contribution amount
Answer “Yes” to the recharacterized question on the “Switch from a Roth To a Traditional IRA?” screen and enter the contribution amount (no earnings or losses) on the next screen.
TurboTax will ask for an explanation statement where it should be stated that the original $xxx.xx plus $xxx.xx earnings (or loss) were recharacterized.
On the screen "Choose Not to Deduct IRA Contributions" answer "Yes" (if you are thinking about doing a backdoor Roth. If you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible)

To enter the 1099-R conversion:

Click on "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”
Click "Continue" and enter the information from your 1099-R
Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
On the "Review your 1099-R info" screen click "Continue"
Answer "yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
Answer the questions about the basis from line 14 of your 2020 Form 8606, the value of all traditional, SEP, and SIMPLE IRAs, and enter the $5,496 as outstanding recharacterization

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

DanaB27 · ‎March 10, 2023

Yes, on your 2021 tax return for outstanding recharacterization, you will enter the contribution amount for 2021 that was recharacterized in 2022 in that box, therefore $5,496.

Please make sure that you entered the recharacterization of your contribution for 2020 on your 2020 tax return with these steps:

Login to your TurboTax Account
Click on "Search" on the top right and type “IRA contributions”
Click on “Jump to IRA contributions"
Select “Roth IRA”
Answer “No” to “Is This a Repayment of a Retirement Distribution
Enter the Roth contribution amount
Answer “Yes” to the recharacterized question on the “Switch from a Roth To a Traditional IRA?” screen and enter the contribution amount (no earnings or losses) on the next screen.
TurboTax will ask for an explanation statement where it should be stated that the original $xxx.xx plus $xxx.xx earnings (or loss) were recharacterized.
On the screen "Choose Not to Deduct IRA Contributions" answer "Yes" (if you are thinking about doing a backdoor Roth. If you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible)

You will have a basis on line 14 of your 2020 Form 8606 which will be entered on your 2021 tax return when TurboTax asks if you had a prior year basis.

On your 2021 tax return to report the recharacterization of the contribution for 2021:

Login to your TurboTax Account
Click on "Search" on the top right and type “IRA contributions”
Click on “Jump to IRA contributions"
Select “Roth IRA”
Answer “No” to “Is This a Repayment of a Retirement Distribution
Enter the Roth contribution amount
Answer “Yes” to the recharacterized question on the “Switch from a Roth To a Traditional IRA?” screen and enter the contribution amount (no earnings or losses) on the next screen.
TurboTax will ask for an explanation statement where it should be stated that the original $xxx.xx plus $xxx.xx earnings (or loss) were recharacterized.
On the screen "Choose Not to Deduct IRA Contributions" answer "Yes" (if you are thinking about doing a backdoor Roth. If you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible)

To enter the 1099-R conversion:

Click on "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”
Click "Continue" and enter the information from your 1099-R
Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
On the "Review your 1099-R info" screen click "Continue"
Answer "yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
Answer the questions about the basis from line 14 of your 2020 Form 8606, the value of all traditional, SEP, and SIMPLE IRAs, and enter the $5,496 as outstanding recharacterization

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

tkenbo · ‎March 10, 2023

Hi thank you for your quick advise.

Yes, I entered the recharacterization for 2020 held at 2021/03 and I have total basis of $5496 at line 14 of 2020 return and transferred to 2021 return.

I entered all other parts of questionaries based on your advise and now this is how my 8606 looks like.