Two Backdoor Roth IRA Contributions for '22 and '23 tax years in same calendar year?

[TaxRefundSeason]

My wife and I performed our first backdoor Roth IRA between Jan - April 2023 for Tax Year 2022. After the backdoor, the Traditional IRA accounts were left to $0.

We have not filed a Form 8606 (did not know about it until now...) and took the standard deduction for Tax Year 2022 (and did not indicate traditional IRA contribution unfortunately... it was our first time).

Fast forward, we performed our second backdoor Roth IRA between April - Dec 2023 for Tax Year 2023. After the backdoor, the Traditional IRA accounts were left to $0 again. Planning on completing Form 8606.

What are the ramifications?

Worries:

• Backdoor Roth performed between Jan-Apr 2023 for Tax Year 2022.
• Did not indicate IRA contribution for Tax Year 2022.

What are next actions that needs to be taken?

[dmertz · Accepted solution]

You must amend your 2022 tax return to add Forms 8606 reporting the nondeductible traditional IRA contributions for you and your wife.  Line 14 of these forms will show each individual's basis in nondeductible traditional IRA contributions made for 2022.  When this amended tax file is transferred into 2023 TurboTax to begin your 2023 tax return, TurboTax will carry forward each amount from line 14 to line 2 of the individual's 2023 Form 8606.

In 2023 TurboTax you'll need to enter the nondeductible traditional IRA contributions made for 2023.  These will appear on each individual's Form 8606 line 1 to be added to the amount on line 2.  You'll also need to enter the Form 1099-R for each individual for the total of each individual's Roth conversions performed in 2023.  TurboTax will complete Forms 8606 Parts I and II to show the taxable amount of the Roth conversions, zero for each if each individual has no other funds in traditional IRAs and there were no investment gains between the time the nondeductible traditional IRA contributions were made and the time the Roth conversions were performed.

[TaxRefundSeason]

I am working on the amendment on TurboTax, but it is stating that "We don't detect any differences between you original 2022 return and your amended return. If you're sure you need to amend, explain why below."

1. I went to Deduction & Credits.
2. Selected Traditional IRA for both self and spouse.
3. Repayment of a Retirement Distribution: No
4. Tell Us How Much You Contributed
   1. Self: $6,000
   2. Tell us how much of the above total contribution for 2022 you contributed between January 1, 2023 and April 18, 2023: $6,000
5. Did you Change Your Mind? Tell us if you switched, or "recharacterized" any of the $6,000 traditional IRA contribution for 2022 over a Roth IRA contribution: No
6. Any Excess IRA Contribution Before 2022? No
7. Any Nondeductible Contribution to IRA? Let us know if you made and kept track of any nondeductible contributions to your traditional IRA from 2021 or prior years. No (should this be Yes even though it is asking for 2021 or prior?)
8. Is this a Repayment of a Retirement Distribution? No
9. Repeated for spouse.

Those are the only changes I've put, but it's throwing up a notice. Should I still continue and file the form 8606 manually if TurboTax doesn't automatically spit this out?

Thank you!

[dmertz]

Regarding step 7, no.  2022 TurboTax is asking for any carryforward from a 2021 or earlier Form 8606.

I'm not sure, but TurboTax might just be indicating that column B of Form 1040-X is all zeros, as it should be.  You should still file  the Forms 8606 that should now be present along with Form 1040-X to provide explanation that reporting these contribution doesn't change anything else on your tax return.

[Critter-3]

Agreed ... you MUST file the amended return to add the form 8606 for each of you.  In the explanation section you will indicate why you are amending even if nothing changed on the front page and mail it in with the 8606 forms attached.