Form 8606 for the second year

[anonymouse1]

In 2024 we did huge Roth conversions which made our AGI too high to make Roth contributions so we did backdoor Roths.  My husband had a $100 nondeductible contribution in 2023 so had a basis already, I didn't have a basis.  So his 8606 for 2024 had a basis of $98 on line 2, plus his $8000 nondeductible contribution for 2024, and his large (over $100,000) conversion in 2024.  His nontaxable portion of the conversion was $97.  His new basis was $8001.  So in 2025, his 8606 was line 1 = $8000 nondeductible contribution for 2025 made in 2025, line 2 = $8001 basis from line 14 of the 2024 form, line 3 total = $16001 sum of those two, line 5 is the same since he didn't make any contributions for 2025 in 2026.  Line 6 is blank even though I entered 0.00 because he didn't have a balance in his traditional IRA on 12/31/2025.  Line 7 is blank (though it should be 0) since you don't enter Roth conversions there, only "regular" distributions from traditional IRAs.  Lines 11 and 12 are also blank (but would be 0 if filled in).  So line 13 is $8004 (his $8000 nondeductible contribution plus $4 in interest he converted) nontaxable distribution (conversion).  I'm not sure how that was done since line 13 is supposed to be the sum of lines 11 and 12 (nontaxable portion NOT converted to Roth).  I get that the $8000 nondeductible "backdoor" contribution shouldn't be taxed, but I don't quite get why the $4 interest wasn't taxed.  But subtracting $8004 from $16,001 his new basis on line 14 is $7997.  Is this correct?  I did get the popup message that he couldn't deduct his IRA contribution.

[DanaB27 · Accepted solution]

To clarify, when was the IRA contribution for 2024 made? And when was it converted? Was there a balance in all of his traditional IRAs on December 31, 2024?

If the 2024 contribution was converted also in 2025 with the nondeductible traditional IRA contribution for 2025 then you should have a 2025 Form 1099-R showing the total for this conversion (around $16,000)  and you will need to review your entries in the retirement section.

[anonymouse1]

I think the 2024 nondeductible contribution was made in January 2025 - I put it on line 1 of the 8606 last year, so it was before filing.  Line 2 was $98 left out of his original $100 nondeductible contributions from earlier years, so that equals $8098 and then line 4 was $8000 since it was made in 2025, line 6 was 0 since he converted all of his traditional IRAs by December 31 2024, so with the huge amount he converted in 2024, line 13 became $97 and line 14 became $8001 to carry over.  So $8001 got put on line 2 this year, add in the $8000 he contributed in 2025, that's $16001 as I said, and since the 2025 contribution was made in 2025 not 2026 line 4 is 0 and line 5 is $16001 but line 8 was the $8004 and since they won't let you put anything larger than 1.0 on line 10, all that $8004 he converted this year is nontaxable, does that sound right?  I was just surprised that he didn't have to pay tax on the $4.  Then 16001 - 8004= 7997 is left on line 14 to carry over for the basis for next year?  I went through the form and the instructions on the IRS website and though surprising, this seems correct?

[anonymouse1]

Oh, thank you - I just looked at my own 8606s and 5498 and the $8000.05 (the 5 cents didn't even get entered) I converted in 2025 was from the $8000 I deposited in January for *2024* contribution, so I bet he did the same thing because he got a 1099-R for $8004.37 and I got one for $8000.05 for 2025 conversions.  So actually, we haven't made 2025 contributions yet!  I'll have to ask him for his 5498 to confirm that his contribution in early 2025 was actually made for 2024 and that he didn't make another.

My 8606 for 2024 filed in 2025 shows the $8000 contribution made early in 2025 (I just looked and it was January 30) for 2024, converted a few days later for $8000.05 and I had no prior basis, but I did have $1000 left in my IRA on 12/31/2024 so line 10 was 0 and all my conversions were taxable in 2024 so line 14 basis became the $8000 I'd contributed in January.  Therefore this year line 2 is $8000 but he and I both have to contribute $8000 more for 2025 before we file.  Once I do that, my basis will be $16000 and his will be $16001 his $8004 will not be taxed and I'll be able to subtract $16000 from my 2025 conversions.