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Returning Member
posted Jun 6, 2019 10:39:37 AM

I have same question. before 2016,I made nondeductible traditional IRA 4 years total $16000. I kept Form 8606. Last year I made a conversion to roth IRA.

I have same question. before 2016,I made nondeductible traditional IRA 4 years total $16000. I kept Form 8606. Last year I made a conversion to roth IRA. I follow the step i was seen in AnswerXchange "A Backdoor ROTH conversion consists of two parts" send part.--The non-taxable distribution. But I still need pay tax! How can I think that? because after I finished get,I need oay tax, for example, $6600. But if I delete  my 1099R form which include $16000, I need pay 2872. So I think I still pay tax for my  non-taxable distribution.

 


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1 Best answer
Level 15
Jun 6, 2019 10:39:39 AM

The non-deductible  contributions cannot be converted in isolation from any other existing traditional and rollover IRA(s). It's best explained by example. Let's say you have a $10,000 balance in all your existing traditional IRAs and that balance consist of $3,000 in deductible contributions, $2,000 in previous non-deductible contributions and $5,000 in earnings (interest, dividends & capital gains). Your basis, in all your IRAs, is $2,000. This year you  convert $5000 to a Roth. Only 20% of the $5000 conversion ($1000) will be tax free . TurboTax will divide that $2,000 basis by the $10,000 balance  to arrive at the 20% tax free ratio.  $4,000  of the conversion will be taxable. This is the way the IRS requires it to be done. The calculations will be shown on form 8606.

3 Replies
Level 15
Jun 6, 2019 10:39:39 AM

The non-deductible  contributions cannot be converted in isolation from any other existing traditional and rollover IRA(s). It's best explained by example. Let's say you have a $10,000 balance in all your existing traditional IRAs and that balance consist of $3,000 in deductible contributions, $2,000 in previous non-deductible contributions and $5,000 in earnings (interest, dividends & capital gains). Your basis, in all your IRAs, is $2,000. This year you  convert $5000 to a Roth. Only 20% of the $5000 conversion ($1000) will be tax free . TurboTax will divide that $2,000 basis by the $10,000 balance  to arrive at the 20% tax free ratio.  $4,000  of the conversion will be taxable. This is the way the IRS requires it to be done. The calculations will be shown on form 8606.

Returning Member
Jun 6, 2019 10:39:40 AM

Can I not attach form 1099R to my return. Because the comment in 1099R? If this form shows federal income tax withheld inbox 4, attach this copy to your return. My 1099R box 4 is nothing.

Returning Member
Jun 6, 2019 10:39:42 AM

Can I not attach form 1099R to my return. Because the comment in 1099R? If this form shows federal income tax withheld inbox 4, attach this copy to your return. My 1099R box 4 is nothing.