2019 1099-R received for back door conversion to Roth IRA

[silabbate]

Hope someone can shed some light.  In April 2019 I mistakenly made a deductible contribution for FY 2018 to my Traditional IRA and filed taxes.  A few days later, the IRS sent me a letter disallowing the deduction because I also had a 401K at work.  The letter said to just pay the tax (which I did) and no need to amend, they were doing it for me.

I immediately consulted a TurboTax CPA and he advised to call Vanguard and "recharacterize" the Trad IRA contribution to a back door Roth IRA contribution.  Vanguard insisted it was a "conversion", not "recharacterization", transferred the funds to the Roth, and in January sent me a 1099-R with a "2" in Box 7 and the full amount of the contribution as "taxable" in Box 2a.

My questions:  Do I have to enter the information of this 2019 1099-R in my 2019 Tax Return at all?  Is the code "2" correct?  Should the back door conversion be reflected in the 2019 tax return or should I amend the 2018 taxes?

Thank you!

[macuser_22]

Yes you must enter it.

First you must need to submit a 2018 8606 for should the disallowed deductible contribution as a non-deductible contribution on the 8606 lines 1,3 and 14.

The when entering the 2919 1099-R you will need he 2018 8606 line 14 amount.

Enter a 1099-R here:

Federal Taxes,
Wages & Income
(I'll choose what I work on - if that screen comes up)
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR Use the "Tools" menu (if online version left side) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]

You will be asked of you had and tracked non-deductible contributions - say yes. The enter the amount from the last filed 8606 form line 14 if it did not transfer. Then enter the total value of any Traditional, SEP and SIMPLE IRA accounts that existed on December 31, 2019.

That will produce a new 8606 form with the taxable amount calculated on lines 6-15 and the remaining carry-forward basis on line 14.

NOTE: If there is an * next to line 15 then 6-15 will be blank and the calculations will be on the "Taxable IRA Distributions worksheet instead.

2018 8606 form:  https://www.irs.gov/pub/irs-prior/f8606--2018.pdf

instructions: https://www.irs.gov/pub/irs-prior/i8606--2018.pdf

where to mail: https://www.irs.gov/filing/where-to-file-addresses-for-taxpayers-and-tax-professionals-filing-form-1...

Since the IRS disallowed the deduction, it is not clear in the regulations if the 8606 is needed or not, since it is automatically non-deductible, but I would send one any way to be safe.

[silabbate]

Thank you!  It is interesting that when I called TurboTax a couple of days ago they told me to ask Vanguard to change the Box 7 code to "R" but Vanguard is sort of refusing to do it saying their form is correct.  Your solution makes sense, and I gather I would just keep the 1099-R form from Vanguard as it is, correct?