Form 8606 for roth conversion

[bobdylan11111]

Could someone clarify this please:  On form 8606 instruction, it says you must file if "you convert tradition IRA to Roth." However, on the form itself, it seems to suggest you need to complete the form when you convert traditional IRA to Roth AND you made nondeductible contribution to traditional IRA.   So for people who converted traditional IRA to Roth, but did not made any non-deductible contributions, do they need to file form 8606? 

[KarenM90]

Yes, if you converted a Traditional IRA to a Roth IRA, Form 8606 needs to be completed. The directions from Form 8606 state:

Who Must File - File Form 8606 if ANY of the following apply:

• You made nondeductible contributions to a traditional IRA for 2019, including a repayment of a qualified disaster or reservist distribution.

• You received distributions from a traditional, SEP, or SIMPLE IRA in 2019 and your basis in traditional IRAs is more than zero. For this purpose, a distribution doesn’t include a distribution that is rolled over (other than a repayment of a qualified disaster distribution (see 2019 Forms 8915-C and 8915-D)), qualified charitable distribution, one-time distribution to fund an HSA, conversion, recharacterization, or return of certain contributions.

• You or your spouse transferred all or part of their traditional, SEP, or SIMPLE IRA in 2019 to the other spouse under a divorce or separation agreement where the transfer resulted in a change in the basis of the traditional IRA of either spouse.

• You converted an amount from a traditional, SEP, or SIMPLE IRA to a Roth IRA in 2019.

• You received distributions from a Roth IRA in 2019 (other than a rollover, recharacterization, or return of certain contributions—see the instructions for Part III, later).

• You received a distribution from an inherited traditional IRA that has a basis, or you received a distribution from an inherited Roth IRA that wasn’t a qualified distribution. You may need to file more than one Form 8606. See IRA with basis under What if You Inherit an IRA? in Pub. 590-B for more information.

[bobdylan11111]

Thanks. 

[dickgreen51]

How to use turbotax to complete irs form 8606 for a partial conversion of some Rollover IRA $ to a Roth IRA.

[Critter-3]

Simple ... enter the 1099-R and just follow the screen instructions.   If you have to enter the IRA contribution do that first and then enter the 1099-R.

First you must enter your Traditional IRA contributions (if there were 2021 contributions ).

IRA contribution
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),,
Retirement & Investments,
Traditional & Roth IRA contribution.

Be SURE to answer the follow up that the are choosing to make this contribution NON-DEDUCTIBLE - if that screen comes up. (DO NOT say that you moved (recharacterized) the money to a Roth) – this is a conversion, not a recharactorazition.

Then enter the 1099-R that shows the distribution.

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).

Answer the follow-up questions answer the question that you moved the money to another retirement. The screen will open up with choices of where it was moved. Choose you converted it to Roth IRA.

When asked if you have made any non-deductible contributions say " "yes" if you did then enter the non-deductible contributions made for tax years before 2021.     (Usually zero unless you also made a 2021 or earlier non-deductible contribution).

Enter the 2021  year end value of your Traditional IRA a "0" (zero) - if it is in fact zero - this tax free Roth conversion will not work if it is not zero. 

[Hal_Al]

Q.  How to use turbotax to complete irs form 8606 for a partial conversion of some Rollover IRA $ to a Roth IRA?

A. Entre the 1099-R, that you received for the conversion, and carefully follow the interview.

You will be asked if you converted it. You will also be asked if you made any prior non-deductible contributions and the value of all your IRAs, at the end of the year. Note: you include all your IRAs, for this info, not just the rollover IRA. 

For more on how this works, read the generic description, below the line.

___________________________________________________________________________________________

The non-deductible  contributions cannot be converted in isolation from any other existing traditional and rollover IRA(s). It's best explained by example. Let's say you have a $10,000 balance in all your existing traditional IRAs, including rollovers, and that balance consist of $3,000 in deductible contributions, $2,000 in previous non-deductible contributions and $5,000 in earnings (interest, dividends & capital gains). Your basis, in all your IRAs, is $2,000. This year you  convert $5000 to a Roth. Only 20% of the $5000 conversion ($1000) will be tax free . TurboTax will divide that $2,000 basis by the $10,000 balance  to arrive at the 20% tax free ratio.  $4,000  of the conversion will be taxable.  This is the way the IRS requires it to be done. The calculations will be shown on form 8606.