Back door IRA help!

[crystalPP]

I double checked:

The total basis as of Dec, 31, 2019, I put down $6000, as shown on my 8606 form last year (2019). 

The next screen value of traditional IRA as of Dec, 31, 2020, I put down $5.56 (because I made a conversion from traditional IRA to roth IRA with the $6000 during 2020, so there is little leftover money). 

My question is: the contribution to traditional IRA is after-tax and nondeductible, why I am taxed a second time just converting it to Roth IRA?

[crystalPP]

I checked my current 8606.

Line 1：$6000

Line 2:  $0

Line 3: $6000

Line2 didn't change to $6000 even though I put down $6000 as IRA basis

[macuser_22]

I had a typo in my last post.  the total of the 8606 line 2 + 3 should be $12,000 to offset the $12,000 distribution.

Line 1 comes form the 2020 non-deductible contribution and line 2 comes form the basis as of Dec 31, 2019 1099-R question.

[crystalPP]

Regards to line 2 didn't change.

Will it be affected by the fact that I have $6000 excess withdraw for 2019, but in the year of 2020?

The 8606 line 2 doesn't look right just showing $0 instead of $6000

[macuser_22]

Are you using the CD/download desktop version of the online version.

[crystalPP]

I am using windows CD download version.

With your help, I have checked everything (in the deductible section and 1099-R section), but the numbers just didn't change.

[macuser_22]

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@crystalPP wrote:

I am using windows CD download version.

With your help, I have checked everything (in the deductible section and 1099-R section), but the numbers just didn't change.

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When entered according to my screenshot the 8606 looks like this. 

On the "Lets find your IRS basis" that is has *your* name - not your spouses name.

[crystalPP]

I did follow your steps and put $6000 for IRA basis (as of Dec, 31, 2019) for **myself**, not my spouse.

But it didn't carried over to the form 8606, line 2 is still showing 0, not $6000 as it is supposed to be.

I've talked to a turbotax agent over the phone and he walked me through all the related fields, making sure everything I did was correct. He was also puzzled why form 8606 doesn't show up correctly. 

Case was still open. It should be very straightforward, as long as line 2 on 8606 is filled up with $6000 basis, I won't have any more tax obligation. I don't know whether that's an issue with desktop version turbotax. Or there is anything else may affect form 8606 line 2. 

[macuser_22]

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@crystalPP wrote:

I did follow your steps and put $6000 for IRA basis (as of Dec, 31, 2019) for **myself**, not my spouse.

But it didn't carried over to the form 8606, line 2 is still showing 0, not $6000 as it is supposed to be.

I've talked to a turbotax agent over the phone and he walked me through all the related fields, making sure everything I did was correct. He was also puzzled why form 8606 doesn't show up correctly. 

Case was still open. It should be very straightforward, as long as line 2 on 8606 is filled up with $6000 basis, I won't have any more tax obligation. I don't know whether that's an issue with desktop version turbotax. Or there is anything else may affect form 8606 line 2. 

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Switch to the forms mode and view the "IRA Information Worksheet" line 12.  It should have the $6,000 on it, if not, enter it there manually.  (Taxpayer is the first person on the tax return, Spouse is the second listed person).

[crystalPP]

Hi there,

I think I figured out where the problem is.

By going to the "IRA Information Worksheet", I found line 12 is $6000 and line 13 (adjustment due to return of excess amount) is $6000 too, which made line 17 adjusted total basis to 0. 

In my case, since I made $12000 contribution to traditional IRA in 2019 and the withdrawal of excess amount happened in 2020, so as of Dec, 31, 2019, my IRA basis should be $12000, instead of $6000, because all the money was left in that account. If I put down my IRA basis to $12000 instead of $6000, then everything is back to normal.

[macuser_22]

Glad you found it.