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OKevinP
Returning Member

8606 for 2020

Turbo Tax will not generate the 8606 automatically. I followed the online directions and still no form. I need to file manually.. Do i fill in line 4? 2019 was the first year i filed a 8606

7 Replies
macuser_22
Level 15

8606 for 2020

 

 


@OKevinP wrote:

Turbo Tax will not generate the 8606 automatically. I followed the online directions and still no form. I need to file manually.. Do i fill in line 4? 2019 was the first year i filed a 8606


Line 4 is for 2020 contributions made in 2022 before the filing date.

 

Why do you need a 8606?   What directions did you follow?


You don't normally enter a 8606 itself. It is automatically created when:

 

1) You make a new non-deductible Traditional IRA contribution.
2) You take a distribution from a IRA that has a after-tax "basis".
3) You make a conversion of a retirement account to a Roth IRA

 

If none of those occurred, then the last filed 8606 remains in effect

 

There are some circumstances when a 8606 must be filed for other reasons and might require filing a stand-alone 8606.

 

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
OKevinP
Returning Member

8606 for 2020

i did a ira to roth IRA back door conversion in 2019. Turbo tax auto generated the form 8606 for tax yr 2019

7K for me, 7K for wife (This was our 1st year on the back door conversion)

I did another ira to Roth IRA back door for 2020. When i generated my 2020 return, it did not auto generate the 8606 form. I read blogs that state the uTurbotax 2020 edition has a glitch and does not auto generate the 86060in tax year 2020

macuser_22
Level 15

8606 for 2020


@OKevinP wrote:

i did a ira to roth IRA back door conversion in 2019. Turbo tax auto generated the form 8606 for tax yr 2019

7K for me, 7K for wife (This was our 1st year on the back door conversion)

I did another ira to Roth IRA back door for 2020. When i generated my 2020 return, it did not auto generate the 8606 form. I read blogs that state the uTurbotax 2020 edition has a glitch and does not auto generate the 86060in tax year 2020


There are no known bugs in the 1099-R and 8606.

 

If you made a 2020 non-deductible Traditional IRA contribution and then converted it to a Roth then the most common error is failing to enter the contribution in the IRA contribution section and mark it non-deductible.

 

Did you even enter the contribution?

 

If you did, was it make deductible and is it on the 1040 Schedule 1 line 19?

 

Enter IRA contributions here:
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),
Retirement & Investments,
Traditional & Roth IRA contribution.

OR  Use the "Tools" menu  (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
OKevinP
Returning Member

8606 for 2020

yes i entered 7K in IRA Deductions/Credits

Yes I entered Made and tracked non deductible contributions to IRA

Line 19 Sched 1 show nothing (blank)?

 

OKevinP
Returning Member

8606 for 2020

found the error

the question asked if you "recharacterized " the contribution.. the correct annswer that generates the 8606 form is NO it was CONVERTED

macuser_22
Level 15

8606 for 2020


@OKevinP wrote:

yes i entered 7K in IRA Deductions/Credits

Yes I entered Made and tracked non deductible contributions to IRA

Line 19 Sched 1 show nothing (blank)?

 


What do you mean "yes i entered 7K in IRA Deductions/Credits"?     If you enter the Traditional IRA contributions then TurboTax will ask if you want to deduct it of make it  non-deductible.   If non deductible it will go on a 8606 line 1.

 

Screen Shot 2021-08-25 at 5.32.36 PM.jpgScreen Shot 2021-08-25 at 5.33.03 PM.jpg

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
macuser_22
Level 15

8606 for 2020


@OKevinP wrote:

yes i entered 7K in IRA Deductions/Credits

Yes I entered Made and tracked non deductible contributions to IRA

Line 19 Sched 1 show nothing (blank)?

 


Correct:

 

Here is the way to enter a "backdoor Roth"

 

The "Backdoor Roth" does not exist in tax law. It is a procedure used by some to take advantage of a quirk in tax law that allows making a non-deductible contribution to a Traditional IRA when one cannot contribute to a Roth IRA, and the immediately converting the Traditional IRA to a Roth IRA, thereby getting the money into the Roth via "backdoor" tax free.

That "procedure" can only work of all these requirements are met:
1) No Traditional IRA account whatsoever can exist (that includes any SEP or SIMPLE IRA accounts) at the start. If existing IRA's contain any before-tax money or earnings then it will be partly taxable.
2) The Tradition IRA contributions must be reported on a 8606 form as non-deductible.
3) The conversion to a ROTH must be shortly after the contribution to avoid taxable gains.
4) The entire Traditional IRA value must be zero that the end of the year of conversion.

Otherwise the conversion will be partly taxable.

First you must enter your Traditional IRA contributions (if there were 2020 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 2020.     (Usually zero unless you also made a 2019 or earlier non-deductible contribution. If you do have prior year basis then enter the last filed 8606 line 14 value.).

Enter the 2020 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 2020, 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 4a of them 1040 form and a zero taxable amount on line 4b if you did it right.

Also see this TurboTax FAQ:
https://ttlc.intuit.com/questions/4350747-how-do-i-enter-a-backdoor-roth-ira-conversion


 

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

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