IRA Basis

Forum|Forum|2 years ago
March 31, 2024
1 reply
9 views

Hello,

I have a question regarding IRA basis. During the tax year of 2022, I contributed $6,000 initially to a Rorth IRA. I realized I would be over the income limit, recharacterized the contributions to a traditional IRA, and then proceeded to perform a backdoor Roth. Before the recharacterization, the $6,000 had lost money and the amount recharacterized was $5,231.48. The amount converted back to the Roth was $5,272.30. The basis reported on 8606 is $769. For tax year of 2023, I contributed $6,500 to traditional IRA (after the end of the tax year) and converted it to a Roth IRA. When preparing my taxes and entering my basis, I enter the $769 which is on the return that was prepared by TurboTax. TurboTax is now saying this doesn't match the basis from 2022 ($0) and that I need to prepare an explanation. I did not have any basis before 2022. Any help regarding a solution would be appreciated.

Thanks.

dmertz

Level 15

The amount of contribution recharacterized was $6,000, not $5,231.48. $5,231.48 was the amount transferred to accomplish the recharacterization of $6,000. You seem to have done something wrong was done with your reporting after that. If the $5,272.30 Roth conversion was done in 2022, your basis that carries forward from 2022, shown on line 14 of your 2022 Form 8606, should have been $728. If the $5,272.30 Roth conversion was instead done in 2023, all $6,000 should have been present on line 14 of your 2022 Form 8660 because there was no Roth conversion done in 2022. Either way, it seems that you need to amend your 2022 Form 8606.

redbull2395Author

Level 2

Thanks for the quick response. Is amending the 8606 able to be accomplished using TurboTax or will I need to complete it by hand? Even if I do amend the 8606, I don't believe it will solve my other issue though. For some reason, TurboTax is not carrying forward the basis from 2022 and is saying my basis is $0. Is there any way to rectify this issue or should I just submit an explanation along with my return saying the basis I am reporting is correct and was present on my 2022 return (after I correct it).

redbull2395Author

Level 2

It appears when generating form 8606, TurboTax took the amount from the 1099R which tracked the recharacterization, not the 1099R for the Roth conversion, which accounts for the error. If there a way to manually fix form 8606 through TurboTax? I have downloaded the desktop version in an attempt to amend the return, but haven't had any luck so far. Thanks again.