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Level 1

I received form 2017 1099-R for the "backdoor" IRA to Roth IRA conversion I did in March 2017 for tax year 2016. Do I have to report this 1099-R in my 2017 return?

This is post tax IRA for "backdoor Roth" conversion. When I imported 1099-R from my broker, my owed tax amount went significantly high (for $5500 contribution). Why would I have to pay tax if this is a post tax contribution? Is there any special steps to follow to have this reported correctly (I am planning to do the same contribution for 2017 before filing my return).

Thanks!!

1 Best answer

Accepted Solutions
Level 20

I received form 2017 1099-R for the "backdoor" IRA to Roth IRA conversion I did in March 2017 for tax year 2016. Do I have to report this 1099-R in my 2017 return?

Here is my "canned" backdoor Roth procedure:

This so-called “back-door Roth” method ONLY works if you have NO OTHER Traditional IRA accounts.  If you do, then the non-deductible part must be spread over ALL accounts and cannot be withdrawn by itself.  Only if you started with NO Traditional, SEP & SIMPLE IRA and ended up with a zero amount in ALL Traditional, SEP & SIMPLE IRA accounts will this Roth conversion not be taxable.

First you must enter your Traditional IRA contributions (if there were 2017 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 2017.     (Usually zero unless you also made a 2016 or earlier non-deductible contribution).

Enter the 2017 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.

[If you had any other Traditional IRA at the end of 2016, then the nondeductible "basis" must be pro-rated over the current distribution and the total IRA value and only a portion of the Roth conversion will be non taxable and part will be taxable, with the remaining non-deductible basis carrying forward for future distributions. You can never only withdrew the nondeductible basis as long as the IRA exists and has a value more than zero.]

The non-deductible amount of your contribution will be subtracted from the taxable amount of the conversion on then 8606 form and enter on line 15a of them 1040 form and a zero taxable amount on line 15b  if you did it right.

Also see this website that has some screenshots of the procedure
http://thefinancebuff.com/how-to-report-backdoor-roth-in-turbotax.html

5 Replies
Level 20

I received form 2017 1099-R for the "backdoor" IRA to Roth IRA conversion I did in March 2017 for tax year 2016. Do I have to report this 1099-R in my 2017 return?

If a 2017 distribution it goes on the 2017 tax return.

Did you report the 2016 non deductible contribution on your 2016 tax return and filed a 8606 reporting the non-deducible basis on lines 1,3 and 14?

When you enter the 2017 1099-R it will ask if you tracked your prior year non-deductible contributions - say yes, then enter the 2016 8606 form line 14 carry forward basis to offset the 2017 distribution.
Highlighted
Level 1

I received form 2017 1099-R for the "backdoor" IRA to Roth IRA conversion I did in March 2017 for tax year 2016. Do I have to report this 1099-R in my 2017 return?

Thanks a lot for the details. That fixed the issue I was facing with 2016 distribution.
How do I report 2017 distribution in 8606 that I did recently?
Level 20

I received form 2017 1099-R for the "backdoor" IRA to Roth IRA conversion I did in March 2017 for tax year 2016. Do I have to report this 1099-R in my 2017 return?

When you entered the 2017 distribution as above, the taxable amount will be calculated on lines 6-15 on the 8606 with the basis entered from the 2016 8606 line 14 going to line 2 on a 2017 8606, the 2017 distribution on line 7, the total 2017 year end value of all Traditional,SEP and SIMPLE IRA's that existed, on line 6.

The taxable amount will be calculated in lines 6-15 with the tax on the 2017 distribution on line 15 and any carry-forward basis (if line 6 is greater then zero) going on line 14 for future distributions.
Level 1

I received form 2017 1099-R for the "backdoor" IRA to Roth IRA conversion I did in March 2017 for tax year 2016. Do I have to report this 1099-R in my 2017 return?

Great. Thanks a lot for your help.
Level 20

I received form 2017 1099-R for the "backdoor" IRA to Roth IRA conversion I did in March 2017 for tax year 2016. Do I have to report this 1099-R in my 2017 return?

Here is my "canned" backdoor Roth procedure:

This so-called “back-door Roth” method ONLY works if you have NO OTHER Traditional IRA accounts.  If you do, then the non-deductible part must be spread over ALL accounts and cannot be withdrawn by itself.  Only if you started with NO Traditional, SEP & SIMPLE IRA and ended up with a zero amount in ALL Traditional, SEP & SIMPLE IRA accounts will this Roth conversion not be taxable.

First you must enter your Traditional IRA contributions (if there were 2017 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 2017.     (Usually zero unless you also made a 2016 or earlier non-deductible contribution).

Enter the 2017 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.

[If you had any other Traditional IRA at the end of 2016, then the nondeductible "basis" must be pro-rated over the current distribution and the total IRA value and only a portion of the Roth conversion will be non taxable and part will be taxable, with the remaining non-deductible basis carrying forward for future distributions. You can never only withdrew the nondeductible basis as long as the IRA exists and has a value more than zero.]

The non-deductible amount of your contribution will be subtracted from the taxable amount of the conversion on then 8606 form and enter on line 15a of them 1040 form and a zero taxable amount on line 15b  if you did it right.

Also see this website that has some screenshots of the procedure
http://thefinancebuff.com/how-to-report-backdoor-roth-in-turbotax.html