Hello experts,
While preparing my tax return for 2023, I came across backdoor roth conversion. I found I entered incorrect numbers for IRA for year 2022.
So I checked my 2022 tax return. Based on TT 8606 form, I have line 1 amount 6000, line 2 amount 600. Hence line 3 amount is 12000. Also, line 14 amount is 12000. Rest of lines are empty. Same is true for my wife.
Based on this, it appears to me I entered wrong numbers for ' total basis in trad ira as of Dec 31, 2022'. It should have been 0 but it shows 6000.
Based on this, I checked my form 1040, line 4b. It has 0 there. Exact text from form 1040 4b "Rollover, 0".
I checked this forum and read I should check IRS tax transcript to see what is reported there.
So I got that and on tax transcript, form 8606 has all 0s. Also. Total ira distribution is 12,000 ( MFJ). Total taxable ira distribution is 0.
Does this means everything is good with my 2022 tax return ?
you did not report your conversion to Roth, which would have been non-taxable.
Your latest Form 8606 shows a basis of $12,000 when it should show -0- after conversion.
you can fix that by amending 2022 tax return to submit correct 8606
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The proper way to file Form 8606 is attached to Form 1040-X.
Form 8606 can be mailed by itself only when you are otherwise not required to file a tax return.
Did you do a true backdoor contribution that is tax-free?
in that case Form 8606 will show a taxable amount of zero.
Do you have the correct taxable amount on Form 1040 Line 4b and did not take a deduction? (Schedule 1 Line 20)?
If that is all true then only Form 8606 has to be attached.
After you e-File,
get Form 1040-X from IRS website and mail it in with your 8606, which you can also get in fillable PDF.
Note: when you are not changing any dollar amounts on your amended tax return, you can leave all the lines 1-23 EMPTY.
Part III explanation: "correcting line 14 Form 8606 ".
You will have to mail it so this does not use up your one 1040-X e-File.
Done this way, you sign 1040-X, not 8606
In your case you need to correct two Forms 8606.
Thanks, here are my responses:
Did you do a true backdoor contribution that is tax-free?
-- Yes. Put money in traditional IRA, converted whole amount to Roth. Traditional stays at 0.
Do you have the correct taxable amount on Form 1040 Line 4b and did not take a deduction? (Schedule 1 Line 20)?
-- yes, Form 1040 Line 4b - $0. Income is above threshold so no deduction taken. Schedule 1 Line 20 - blank.
I have already amended my 2022 return once, because of K1 form.
I guess Turbotax allows amending return again. My previous amended return was accepted successfully.
Thanks!
I figured out my mistakes on my form. I am able to amend my tax return and I see correct form 8606 now.
I made this mistake in 2021 and 2022 tax returns. I will amend and file both of then.
I used turbotax premium desktop version. Can I efile 2021 amended return ? I think not. I have to paperfile.
How about filing 2022 tax return?
One more question :
For amended return, should I send just three documents: form 1040X, form 1040 and form 8606 for myself & spouse.
Except form 8606, nothing has changed on tax return.
Thanks!
In general, when paper filing, do not include your old 1040, nor your revised 1040 because the Form 1040-X reflects any changes there and becomes your new tax return.
In this case, include only Forms 8606. Leave Lines 1-23 EMPTY.
Mail to the address shown in the current Instructions for 1040-X.
Done this way, you sign 1040-X, not 8606.