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:
What are next actions that needs to be taken?
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.
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.
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."
should this be Yes even though it is asking for 2021 or prior?
)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!
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.