Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
New Member
posted Sep 28, 2022 11:54:41 AM

Roth conversion

In my last year my text return (2021), I have IRA conversion to Roth IRA $46719.40 which include my $7000 after-tax money for which I intended to do the backdoor Roth conversion. But tax return gives $43540 as IRA distribution and only $46719-$43540 = $3179 without tax. The $7000 -$3179 = $3821 is double taxed.

 

Why did I get double-taxed? At beginning of the year 2021, my IRA account is empty and I add after-tax $7000 to IRA as a way to get to Roth of backdoor methods. Then I transferred that $7000 to my Roth IRA.  Later in the year (I got laid off), I rollover my 401k to my IRA account (empty at the time). At end of the year, I converted $39719.40 to my Roth. So only my $39719.40 need to be taxed. I know later that I shouldn’t mix both pre-tax and after-tax money in my IRA account, I was taxed $43540, and the $43540 - $39719 = $3821 was double taxed.

 

However, my understanding is that my $7000 -$3179 = $3821 isn’t double taxed but it is left in my IRA account for the later tax credit. So, this year (2022) I converted all my IRA into my Roth IRA account and left my IRA account empty. I think in this way, I could get my $3821 credit back. Do you think my thought is right? If yes, could you give me advice on how to file the 2022 Tax Return next year to get my $3821 credit back?

Thanks so much! 😊

Jia

 

0 1 137
1 Replies
Employee Finance Expert
Sep 28, 2022 12:35:26 PM

Hi Jia,

thank you for your question.

If you used TurboTax Live to file your taxes, easiest way to get answer to your question is by having a TurboTax Live Expert review your tax return and answer your question. the review will allow us to see how and what entries were made and what information was there on your 1099R(s).

Further it is not clear if your IRA account balance as on 12/31/2021was '0' or $3821.

  • if the balance of your IRA account is '0' then you may need to amend your tax return to correct so that $7000 (your after tax contribution to your IRA account) is converted free of any tax liability.
  • if the balance of your IRA account was $3821, then you did your taxes right and will be able to use your remaining basis while filing your 2022 taxes.

Hope this answers your question.

Thanks again for reaching out.