Reporting excess Previous year IRA contribution which was deposited in current year

[sgarg2015]

I am writing to seek assistance with reporting my IRA conversions for the 2025 tax year. In January 2025, I contributed $2,000 to a traditional IRA for the 2024 tax year and subsequently converted it to a Roth IRA. In February 2025, I contributed an additional $7,000 for the 2025 tax year and converted that amount as well.

My Form 1099-R reflects a total distribution of $9,016 (including $16 in interest). However, the software is currently categorizing $2,016 of this as taxable income. Since the $2,000 was a non-deductible contribution, it should be treated as basis. Could you please advise on how to properly report in TurboTax to ensure this is not double-taxed?

[baldietax]

what did you file for 2024?

check your Form 8606's for 2024 and 2025 to see what's happening.

the $2000 should have been a non-deductible contribution filed for 2024 tax year, and carried over on Line 14 of 2024 Form 8606 to Line 2 of 2025 Form 8606.

you should then have a $7000 contribution for 2025 on Line 1 of 2025 8606, total basis $9000.

[sgarg2015]

Hi @baldietax thanks for your quick reply.

I don't have 8606 form for last year and this year. Also it seems i missed to show this 2000$ contribution in 2024 ITR return as it was not part of 1099-R 2024 form.

May i know what should be recommeded steps now?

[baldietax]

If you didn't file 8606 in 2024 you would need to do that to get the basis correctly recorded for 2024.

For your 2025 return, there is the question in the IRA section "Did you have any nondeductible IRA contributions to your traditional IRA from 2024 or prior years?" you would say Yes to that and provide the updated basis $2000 to reflect that on your 2025 8606 Line 2.

I don't think you need to wait to file 2024 8606 before you can file 2025 but at least have it prepared to confirm the outcome on 2024 8606 Line 14 which carries across to 2025 8606 Line 2.

See the comments under "If your conversion contains contributions made in 2025 for 2024" at end of this article if 8606 wasn't filed.  This article suggests to just mail in Form 8606 to record the basis if it was missed.  Other advice in this forum has been to file 1040-X but I am not sure the criteria for that, that may be better for changes to an existing 8606.

https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-benefits/enter-backdoor-roth-...

Not a CPA but this is my understanding based on what you've described.

@dmertz 

[dmertz]

baldietax covered everything quite well, so I don't have anything to add.

[Opus 17]

Remember that while contributions can either be for the current year or the past year (within limits), the conversion only happens on the date it happens.  This is not a problem when reported correctly. In this case, you had a $2000 contribution in 2024 only, a $7000 contribution in 2025, and a $9000 conversion in 2025.