Skip to main content
Level 1
March 4, 2021
Question

Backdoor Roth IRA Contribution

  • March 4, 2021
  • 2 replies
  • 0 views

I made a $6,000 nondeductible contribution to an IRA after 1/1/2021, but marked it as a 2020 contribution and then converted to a Roth IRA shortly after. How is this handled for 2020 taxes? Do I report anything for 2020?

    2 replies

    WendyN2
    Level 9
    March 7, 2021

    If I am understanding you correctly, you reported a 2020 contribution that gave you an increased refund because it was not taxing you based on the information you gave to the system, but actually you had contributed to a taxable instrument. Then you converted altogether to a Roth. If that is correct, given that you've converted it before the April 15th deadline (possible to change to June 15th deadline) to a Roth - and if you in fact did receive a "benefit" to your refund, you should amend your return given that you previously reported it to the IRS as a contribution but then converted to a taxable instrument (income not excluded). Again, if this is the case, the IRS will merely take it, plus interest and penalties out of your 2021 refund, if any refund is due to you at that point.

    Critter-3
    Level 15
    March 7, 2021

    On the 2020 return you will ONLY  report the non deductible 2020 contribution on the form 8606  ... then on the 2021 return you will report the conversion when the 1099-R form is sent next January. 

    macuser_22
    Alumni - Champ
    Alumni - Champ
    March 7, 2021

    @ccbuckall wrote:

    I made a $6,000 nondeductible contribution to an IRA after 1/1/2021, but marked it as a 2020 contribution and then converted to a Roth IRA shortly after. How is this handled for 2020 taxes? Do I report anything for 2020?


    Yes, you enter the IRA contribution and make it non-deductible.  That will produce a 2020 8606 form with the contribution on line 1, 3 & 14.     You will need that 8606 when you do your 2021 tax return.

     

    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.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.**