Non-Deductible IRA Contributions to Traditional IRA

[rvr13]

For Tax Year 2023 : I did not make any Traditional IRA Contribution during the year 2023. For the first time, I made $6500 contributions for Tax year 2023 during the year 2024 before April tax filing deadline and did backdoor Roth conversion for all of my Traditional IRA contributions.
Form 8606 for tax year 2023 says that my total basis in traditional IRAs for 2023 and earlier years is $6500

For Tax Year 2024 : I made $7000 contributions for Tax year 2024 during the same year 2024 and did backdoor Roth conversion for all of my Traditional IRA contributions.

Form 8606 for tax year 2024 now says that my total basis in traditional IRAs for 2024 and earlier years is $0.

Is my form 8606 correct? Is my total basis $0 because I converted all of my Traditional IRA contributions to Roth IRA during the same tax filing year?

For Tax Year 2025 : What do I fill out for the question on Turbotax "Did you have any nondeductible IRA contributions to your traditional IRA from 2024 or prior years?"

Should I answer "NO" based on my 2024 Form 8606 total basis being $0?

[MindyB]

Yes, your Form 8606 is correct because the "total basis" represents the after-tax money remaining in your Traditional IRA at the end of the year; since you converted your entire balance to a Roth IRA in 2024, you effectively "used up" that basis, leaving a year-end balance of $0. 

When you move to your 2025 Tax Year return in TurboTax, you can answer "Yes" to the question regarding prior nondeductible contributions, but then enter $0 when it asks for your total basis from your 2024 Form 8606 (specifically Line 14). 

[rvr13]

Thank you Mindy!

Question regarding my 2023 Tax Year  Form : I did not have any contributions made in the year 2023 instead I contributed to Traditional IRA and also did the backdoor Roth conversion in 2024 before tax filing deadline in April.

My "total basis in traditional IRAs for 2023 and earlier years" on my 8606 shows $6500. Is this incorrect?

Since, I did not contribute to the Traditional IRA before the end of year 2023 shouldn't my 2023 year-end balance be $0?

[dmertz]

Your 2023 Form 8606 is correct.  Nondeductible traditional IRA contributions are to be reported on the Form 8606 for the year for which the contribution is made, not the year in which the contribution is made.  You made the $6,500 contribution for 2023, so it correctly appears on your 2023 From 8606.  Because you made no traditional IRA distributions in 2023, this $6,500 carried forward from line 14 of your 2023 Form 8606 to line 2 of your 2024 From 8606.

[rvr13]

Thank you dmertz

Turbotax is also asking me for Taxable and Non-taxable amounts for my Traditional IRA conversion to Roth IRA for year 2023 and 2024

For 2023, will the Taxable and Non-taxable amounts both be $0? since I did not do the Roth conversion during the year 2023 but instead did it in 2024 (for tax year 2023) before the tax deadline?

For 2024, will the Taxable amount be $0 and Non-taxable amounts be $13500? Since I did the Roth conversion for both Tax years (2023 and 2024) in year 2024?

[dmertz]

"For 2023, will the Taxable and Non-taxable amounts both be $0? since I did not do the Roth conversion during the year 2023 but instead did it in 2024 (for tax year 2023) before the tax deadline"

Correct.

For 2024, will the Taxable amount be $0 and Non-taxable amounts be $13500? Since I did the Roth conversion for both Tax years (2023 and 2024) in year 2024?

Correct.

If you made correct entries using TurboTax to prepare the tax returns for these years, this information should automatically transfer forward when you transfer in the previous year's tax return to begin the next year's tax return.