I contributed $5500 to my traditional IRA for 2017. This year I converted it to a ROTH and now I'm wondering if I messed up. Should I have made it after the conversion?

[drumsjrm]

I did not receive a tax break on the 2017 traditional contribution so wondering if I messed up and should have done the 2017 contribution after the account was transferred to the ROTH. I have a feeling nothing can be done after the fact though and hoping i didn't just cost myself a 25% tax rate on the $5500 contribution.

[macuser_22 · Accepted solution]

Be sure to enter the 2017 contribution in the IRA contribution section now on your 2017 tax return and indicate that you do not want to deduct it.   Do NOT say that it was a recharacterization to a Roth - it was not - it was a *conversion*.

That will put the nondeductible contribution online 1 of a 8606 form that will offset some or all of the tax on the Roth conversion calculated on lines 6-15 on the same 8606 form.

When you say " This year I converted it to a ROTH"  do you mean 2018?   If so you will receive a 1099-R for the distribution/conversion in 2019 and report that on your 2018 tax return as shown below.  If you converted it *in* 2017 and have a 2017 1099-R report that as follows now.

In the 1099-R interview you will be asked if you had prior year non-deductible contribution - do not enter the 2017 contribution  there, but on the next screen you must enter the total 2017 year end value of all existing Traditional IRA, SEP or SIMPLE IRA accounts that existed (or zero if none existed) so that the nondeductible basis can be properly prorated over the current distribution/conversion and the total value.   This part of the interview comes AFTER the 1099-R summary screen.

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.

Enter a 1099-R here:

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).

OR  Use the "Tools" menu (if online version left side) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]

[drumsjrm]

Thanks! I did the conversion in 2018. So the traditional IRA contribution made in 2017 I put that on my taxes in 2017 but is there anything special I need to do. because my income level it does not deduct anything and I did not see a way to say if I want it deducted or not. Thanks again.

[macuser_22]

If your income prevents a deduction the question will not appear because it is automatically not deductible.  Keep a copy of the 8606.   You will need to enter the line 14 value for the prior years non-deductible basis when you enter the 2018 1099-R next year.

[drumsjrm]

Ok thanks. I do not see an 8606 form and can't find a way to generate this.

[macuser_22]

It should be automatic when you entered the non-deductible Traditional IRA contribution as in the answer above.    Are you using the online version  or CD/download version?

[drumsjrm]

I was using Credit Karma software but maybe they don't support this. So ill have to use a different software for this. Thanks.

[macuser_22]

I can only tell you how to do it in TurboTax.   This is a TurboTax help forum.  Perhaps CK has a forum where you can ask.

[copycat0819]

Should have converted to the ROTH before making the contribution.

[drumsjrm]

So I have to pay tax on that money twice? Income tax on the $5500 and now again going into the ROTH?

[drumsjrm]

So I have to pay tax on that money twice? Income tax on the $5500 and now again going into the ROTH?