1099-R Increased my tax due

[barathvasu]

I did a backdoor Roth IRA contribution $6000 for 2021 on April 2022. In the same year around June 2022 I did a back door Roth Contribution of $6000. I got my 1099-R form with a value of $12,000, under wages & income section when I enter my 1099-R (uploaded the PDF) it increased my taxes by $1400. This should not happen since my back door Roth IRA is after tax deduction. Can some experts help me here?

[Mike9241]

if i understand correcty what you did your form 8606 for 2021 should show a basis of $6000 on line 2 {the 2021 contribution made in 2022) then line 1 should show $6000 for the non deductible contribution you made in 2022 for 2022. line 8 should show $12K for the conversions.  line 11 should be the same (assuming line 6 is zero). line 16 and 17 should both be $12K assuming line 6  is zero. 

[barathvasu]

Thanks for the details. I will check 8606 form, to give more background on what is happening in my case, I deleted my 1099-R and uploaded the form again. After verifying the uploaded form clicking next step showed me "Even though you’re taking money out early, you don’t need to pay a penalty because of your situation." 

I never took money out, I only did conversion. What field is causing this glitch?

P.S. I almost completed my taxes, when reviewing something in this 1099-R section clicking next increased my tax by $1500 earlier it was not calculating it :(

[barathvasu]

Hi, 

Please find my replies to your queries below (check my response after "-" and formatted in italics)

1. If i understand correctly what you did your form 8606 for 2021 should show a basis of $6000 on line 2 {the 2021 contribution made in 2022) - Yes checked 2021 returns and The basis in line#2 shows $6000 in my previous year return 8606 form

2. Then line 1 should show $6000 for the non deductible contribution you made in 2022 for 2022. - Yes I see $6000 in line 1

3. line 8 should show $12K for the conversions. - It's empty

4. line 11 should be the same (assuming line 6 is zero). - line 11 is also empty and line 6 is empty too!

5. line 16 and 17 should both be $12K assuming line 6  is zero. -  For me line 16 is $12,000 and line 16 is $6000, due to this taxable amount on line 18 is showing as $6000. 

Question:

When I jump to 8606 in turbox tax online, What is the amount I need to enter for the screen "Tell Us How much you contributed , i.e. Total 2022 traditional IRA contributions I entered $6000, Then when I navigate to Let's Find Your IRA Basis screen this was empty and for Total Basis as of December 31,2021,  I entered it as $6000, Is this correct???

Note: If I do this it works fine and doesn't add more taxes. But still NOTE Still to above point what you posted in previous reply in my 8606 form of 2022 line# 6 and line 8 both are still empty no value in it.

Please let me know how to resolve this issue?

As mentioned earlier everything was looking good 3 days before when I was reviewing this it caused an error and software doesn't show correct taxes which I owe

[jay003]

I have a similar issue where I contributed $12,000 to the backdoor roth ira.  Since it was for 2 different years it meets the limit of $6,000 per year and should not result in me paying any additional taxes.  However, I do not have any idea on how to enter this so that it doesn't increase my taxes (as it should not).  I would appreciate it if someone shares the step by step instruction to do this.  Thanks in advance.

[DanaB27 · Accepted solution]

Yes, you will enter the $6,000 contribution for 2022, and then for the total Basis as of December 31, 2021, enter $6,000 (from your 2021 8606 line 14). Therefore, your 2022 8606 will have $6,000 in line 1 and line 2. Lines 3 and 5 should be $12,000.

If you have a star (*) next to line 13 then TurboTax uses the Worksheet 1-1. Figuring the Taxable Part of Your IRA Distribution to calculate the nontaxable portion and lines 6 to 12 won't have any entries.

@barathvasu 

@jay003 

Sunday, March 3, 2019

1:31 PM

Please use the following instructions to enter a "Backdoor IRA" to ensure it is calculated correctly in TurboTax.

To enter the nondeductible contribution to the traditional IRA:

1. Login to your TurboTax Account 
2. Click on "Search" on the top right and type “IRA contributions” 
3. Click on “Jump to IRA contributions"
4. Select “traditional IRA”
5. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
6. Enter the amount you contributed
7. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
8. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contribution before this tax year.
9. Enter your basis in the Traditional IRA from your 2021 Form 8606 line 14 (if you had a basis in the prior year)
10. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (if you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible).

To enter the Form 1099-R conversion: 

1. Click on "Search" on the top right and type “1099-R”  
2. Click on “Jump to 1099-R”
3. Click "Continue" and enter the information from your 1099-R
4. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
5. On the "Review your 1099-R info" screen click "Continue"
6. Answer "yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
7. Answer the questions about the basis from line 14 of your 2021 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs