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Level 3

Solved

IRA to Roth Conversion - IRA Basis

Forum|Forum|2 years ago
February 20, 2024
16 replies
151 views

Hello, I'm having issues with the IRA Basis...

Here is a timeline of what I did....

from ~ 3/1/2022 - 2/20/23: My IRA had a balance of $0.02

02/21/23 - Made a NON- Deductible contribution to my IRA

02/21/23 - Converted $6,000 of that to my Roth IRA

My 2023 1099-R has:

Box1: $6000

Box2a: $6000

When TurboTax asks for my IRA Basis, it says to look at my previous years Form 8606..

So I look on my 2022 taxes on Form 8606 line 14, and it says $0.0

Then Turbotax says I must pay taxes on that distribution .. So I'm wondering what am I doing wrong??

Thanks!

TurboTax Home & Biz Windows

Best answer by AnnetteB6

There are two things needed in your 2023 tax return to report a back door Roth IRA conversion.

First, you have to enter the non-deductible Traditional IRA contribution made in 2023. That will establish the basis in your Traditional IRA. Based on your information, prior to 2023 your Traditional IRA basis would be zero.

Second, you enter the Form 1099-R that is reporting the distribution from the Traditional IRA which is then converted to the Roth IRA. With the distribution being equal to the basis, this should be non-taxable.

Here is a TurboTax article that gives you these steps to follow so that it is reported correctly in your return:

How do I enter a backdoor Roth IRA conversion?

Employee Tax Expert

Answer

Employee Tax Expert

There are two things needed in your 2023 tax return to report a back door Roth IRA conversion.

First, you have to enter the non-deductible Traditional IRA contribution made in 2023. That will establish the basis in your Traditional IRA. Based on your information, prior to 2023 your Traditional IRA basis would be zero.

Second, you enter the Form 1099-R that is reporting the distribution from the Traditional IRA which is then converted to the Roth IRA. With the distribution being equal to the basis, this should be non-taxable.

Here is a TurboTax article that gives you these steps to follow so that it is reported correctly in your return:

How do I enter a backdoor Roth IRA conversion?

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Level 3

Oops... I spoke too soon.... now I see where I'm getting confused ... Here is a corrected timeline:

From ~ 3/1/2022 - 2/20/23: My IRA had a balance of $0.02

02/21/23 - Made a NON- Deductible contribution of $6,000 to my IRA FOR THE YEAR 2022

02/21/23 - Converted $6,000 of that to my Roth IRA

01/15/24 - Made a NON- Deductible contribution of $6,500 to my IRA FOR THE YEAR 2023

02/15/24 - Converted $6,500 of that to my Roth IRA

the 1099-R is for the 2022 IRA conversion....

so when I enter $6,500 into the box that says "Tell us how much you contributed between Jan - April 2024... it is making me pay taxes on it.

should Box2a on the 1099-R have $6,000?

Further guidance would be greatly appreciated !

Level 15

Thanks for your help!

For my 2022 Taxes:

Schedule 1 has line 20 as blank.

Form 8606 is as follows:

1)

2) 6000

3) 6000

4)

5) 6000

6) 0

7) 6000

8 )

9) 6000

10) x1.0

11)

12) 6000

13) 6000

All the rest is 0 or blank.

Line 7 of the 2022 Form 8606 should not show $6,000. Your timeline shows the $6,000 Roth conversion as occurring in 2023 not 2022.

How did you report a Roth conversion in 2022 if you had no 2022 Form 1099-R for a distribution from a traditional IRA?