Question about filling out a 8606 when doing a backdoor Roth

[anonymouse1]

I have no basis (nondeductible contributions) in my traditional IRA.  I had made some nondeductible contributions back in the 1990s, then converted the account to a Roth when Roths became available (I believe it was 1999).  So I have not filed an 8606 in over 20 years.  I did make deductible contributions throughout the 2000s, and converted all but $1000 of those by the end of 2024.  I converted that last $1000 in January of 2025.  I then made a nondeductible contribution of $8000, and converted (plus 3 cents of interest) to a Roth.  If we go by the last 8606, my basis was $0 (nondeductible contributions), and I converted all but $1000 in 2024.  I did answer the question about contributing to an IRA between January 1 and April 15 2025.  But I'm wondering, should my basis on the 2024 form 8606 be $0, or $8000?  I will have to fill out the form for 2025 next year showing that I converted $9000.03, and I don't want to get taxed twice on that nondeductible $8000 (once being included in gross income in 2024, and once upon conversion).

[MindyB · Accepted solution]

If you made the $8,000 contribution in 2025, and directed it to be considered a 2024 contribution, then you will have an $8,000 basis reported on the 2024 8606.  You won't be taxed twice, because when you report the conversion in 2025, you will have a nondeductible IRA's basis of $8,000 carried forward to 2025.  You'll only pay tax on the conversion of the traditional IRA in the amount of $1,000 that you did not pay tax on yet.

Here are the full instructions to report a Backdoor Roth: How do I enter a backdoor Roth IRA conversion?

[anonymouse1]

Thank you.  My 8606 does show the $8000 as a basis with previous basis being 0.  My husband's (he has not yet made his contribution but will before April 15) shows $8000 (planned) and $98 basis (because he had previously made a $100 nondeductible contribution, and converted part of his IRA in 2023 and the rest in 2024, so his traditional IRA balance at the end of 2024 was 0).  His nontaxable portion of the 2024 conversion is shown as $97, and his basis for 2024 is now $8001??  Even though once he makes his $8000 contribution he will only have $8000 in the traditional IRA?  My basis for 2024 and earlier years (line 14) is the $8000 that I contributed earlier this year for 2024.  So when I get my 1099-R for 2025, showing I converted $9000.03, $1000.03 (the $1000 deductible that was left in my traditional IRA at the end of 2024 plus the $0.03 interest I earned  - but didn't get credited, so I had to convert that separately - before I converted the $8000 this year) will be taxable?  But he can earn up to $1 in interest between his contribution and his backdoor conversion and have it not included in taxable income for 2025?

[DanaB27]

Yes, if there is a loss before converting funds then it is possible to have a basis left even when all funds have been converted. Therefore, your husband has the $1 basis added to his $8,000 basis from the nondeductible contribution for 2024. Yes, if he earns $1 interest before converting the funds then his conversion of $8,001would be nontaxable.

Yes, part of your conversion will be taxable since you had pre-tax (deductible ) funds in your traditional account. Yes, if you balance is $0 at the end of 2025 then $1,000.03 of the $9,000.03 conversion will be taxable.