Reporting IRA basis

Scouse-s — Wed, 22 Jan 2025 02:03:57 GMT

I made 2022 and 2023 Roth IRA contribution in 2023. Early 2024, I realized I was ineligible to make direct Roth contribution. I did the following.

2023 Contribution

I recharacterized the 2023 amount and did a backdoor Roth conversion. I then reported the 2023 contribution amount as basis in form 8606. I didn't pay any tax on the gain ( so nothing reported on 1040).

2022 Contribution

I withdrew the 2022 amount and paid penalties for both the year by filing 5329 for 2022 and 2023 in 2024. IRS the assessed additional penalty for early withdrawal which I paid as well. However, I didn't include the 2022 contribution as basis in the 2023 8606 form.

Now in 2025, I received three 1099r form. One with the $6000 for 2022 contribution with code J, one for the 2023 recharacterization ( contribution plus gain) with code R. The other 1099r is for the traditional IRA account with distribution (contribution plus gain) with distribution code 2.

My questions are :

1. Do I need to file 2022 8606 to count 2022 contribution as a basis, amend 2023 8606 form to rectify the basis so that that $6000 distribution (to be reported in 2024 8606 part III) is not considered taxable by IRS?

2. If answer is Yes, can I submit both 8606 forms together without 1040X since my taxable amounts are not changing ?

3. For the 1099r form with code 2, I should calculate the gain and report that as taxable income , is that correct ? My understanding is taxable amount = (amount in line 1 - contributions of 2022- contributions of 2023 - gains of the recharacterized amount of 2023).

4. Do I need to do anything for 1099r code R?

Any help is much appreciated

Re: Reporting IRA basis

dmertz — Wed, 22 Jan 2025 03:55:32 GMT

"2022 Contribution

Something is wrong here. There is no early distribution penalty involved in this. It's impossible for the IRS to have assessed an early-distribution penalty on a distribution made in 2024 since your 2024 tax return is not yet due. Perhaps what you were charged was interest on the late payment of the excess-contribution penalties.

1 and 2. Roth contributions are not reported on Form 8606. Nothing that you have mentioned is reportable on a 2022 Form 8606.

3. The taxable amount of the code-2 Form 1099-R that reports the Roth conversion is determined on Parts I and II of your 2024 Form 8606. All of the calculates are done on that form. You do not do any separate calculations outside of that form.

4. As long as you file the 2023 Form 8606 showing the correct addition to your basis in nondeductible traditional IRA contributions, you can ignore the code-R 2024 Form 1099-R.

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Reporting IRA basis

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