8606

Forum|Forum|5 years ago
February 23, 2021
1 reply
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I need assistance on correctly completing my IRA worksheets (form 8606, etc…). My wife and I each make nondeductible contributions to a Traditional IRA every year and then convert the funds to our Roth IRAs. We have done this for several years now and it is usually a simple process. However, we made our 2019 Traditional IRA contribution ($6,000 each) on 2/27/20 which is the same day we made our 2020 Traditional IRA contribution ($6,000 each). We then converted the $12,000 each to our Roth IRAs on 3/2/20.

Using the Turbotax software, I am not quite sure the information is being input correctly to reflect that the tax free conversion for both 2019 and 2020 was done in calendar year 2020. It is currently showing as an excess contribution for 2021 which is not correct. Can you assist me in making sure the software correctly reflects the 2019 and 2020 conversion to the Roth completed in calendar year 2020 is reflected properly?

macuser_22

Alumni - Champ

@BBFL wrote:

I need assistance on correctly completing my IRA worksheets (form 8606, etc…). My wife and I each make nondeductible contributions to a Traditional IRA every year and then convert the funds to our Roth IRAs. We have done this for several years now and it is usually a simple process. However, we made our 2019 Traditional IRA contribution ($6,000 each) on 2/27/20 which is the same day we made our 2020 Traditional IRA contribution ($6,000 each). We then converted the $12,000 each to our Roth IRAs on 3/2/20.

Using the Turbotax software, I am not quite sure the information is being input correctly to reflect that the tax free conversion for both 2019 and 2020 was done in calendar year 2020. It is currently showing as an excess contribution for 2021 which is not correct. Can you assist me in making sure the software correctly reflects the 2019 and 2020 conversion to the Roth completed in calendar year 2020 is reflected properly?

Did you enter the 2020 contribution into the 2020 IRA contribution interview and say that is was non-deductible.

And did you enter the 2019 contribution made in 2020 *for* 2019 into the 2019 IRA contribution interview as non-deductible that would have produce a 2019 8608-T and 8606-S for each of you with the 2019 contribution on line 1,3 and 14? You need the 2019 8606 line 14 for the 2020 1099-R conversion to apply the 2019 "basis".

**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.**

BBFLAuthor

Level 2

I did enter the 2020 contribution into the 2020 IRA contribution interview and say that is was non-deductible.

I did not enter the 2019 contribution made in 2020 *for* 2019 into the 2019 IRA contribution interview as non-deductible. I did not use Turbotax for 2019 taxes and form 8606 was not completed. The 1099-R from Vanguard wasnt available for tax year 2019 since the since the contribution and conversion wasn't executed until 2020. Do I need to amend my 2019 taxes? Hoe do I get this to reflect properly on Turbotax premier 2020?

Thanks for your help

macuser_22

Alumni - Champ

@BBFL wrote:

I did enter the 2020 contribution into the 2020 IRA contribution interview and say that is was non-deductible.

I did not enter the 2019 contribution made in 2020 *for* 2019 into the 2019 IRA contribution interview as non-deductible. I did not use Turbotax for 2019 taxes and form 8606 was not completed. The 1099-R from Vanguard wasnt available for tax year 2019 since the since the contribution and conversion wasn't executed until 2020. Do I need to amend my 2019 taxes? Hoe do I get this to reflect properly on Turbotax premier 2020?

Thanks for your help

Yes, Unless you filed a 2019 8606 to report the non-deductible 2019 contribution it can be disallowed by the IRS and you are not allowed to use it to offset the tax on the Roth conversion - it would be treated as if it was deductible even though you did not receive the deduction - that is the penalty for failing to file the required 8606. You can amend 2019 and file it late.

**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.**