Roth IRA form 8606

[cardnexus]

All,

Need some help on the Roth and backdoor Roth IRA!

I was stupid enough to make mistake twice in a row therefore there're  two questions.

In 2020, when our income was below the Roth IRA threshold of 196,000, we put 6,000 each in our IRA account. But I realized today that I didn't fill the 8606 form. How do I resubmit it? Do I just send the from itself or need to redo the entire 2020 tax.

In 2021, we can no longer contribute Roth so we did the backdoor IRA. I accidentally put the incorrect amount on form 8606. How do I amend that? Do I need to do 8606x? 

Thank you very much!

[DavidD66]

You don't need to file a Form 8606 for a contribution to a Roth IRA.  It's a good idea to enter the information in TurboTax in case you take a distribution before age 59 1/2 and need to know the amount of your contributions (basis).  

If your backdoor Roth was a non-taxable event, then won't owe any additional tax.  You can complete a new Form 8606 showing the revised information and file it with Form 1040-X.  Your Form 1040-X won't show any changes to your return.  Just indicate in the reason for amending your return is to submit a revised Form 8606.  If you have traditional IRAs that caused a portion of your backdoor Roth to be taxable, then you're 1040-X will show changes and result in additional income tax being owed.  This will be the  case for your state return, if your state has a personal income tax.

[cardnexus]

Thanks DavidD66!

For FY2020, I put down 1,000 each on the 8606 form but later forgot to do the backdoor IRA. If I understand 8606 correctly, it will make my future earning on the 1,000 non-taxable if I reported it. Since I never deposit the 1,000, does it matter I file the amended form?

Please let me know.

Thanks again!

[fanfare]

"it will make my future earning on the 1,000 non-taxable if I reported it"

it doesn't work that way.

$1,000 non-deducted contribution is basis and adds to any prior basis.
There is a penalty for failure to file Form 8606 when called for.

@cardnexus 

[cardnexus]

I see. Maybe I misunderstood how Roth IRA works.

If I contributed regular Roth IRA with 6,000. If I doubled it thru investment, would I get tax for the additional 6k?

And would it be any different whether it's Roth IRA or backdoor IRA?

Many thanks!

[MinhT1]

Any gains through capital gains, dividends and other distributions within the Roth IRA account are not taxed.

Qualified distributions of these gains (i.e. after age 59 1/2 and when the Roth IRA is 5 years or older) are not taxed.

The gains are taxed when distributed before age 59 1/2 (plus a 10% early distribution penalty) or when the account is less than 5 years old.