Back Door Roth IRA Conversion Attributed to Multiple Years: Shows Taxes Owed

[vjr2985]

In February 2024, I contributed $13,500 to a Traditional IRA in Vanguard using after-tax savings with the plan to attribute $6,500 to the 2023 tax year and $7,000 to the 2024 tax year. I immediately performed a conversion to my existing Roth IRA for a total of $13,505 due to the small amount of interest gained. I received a 1099-R in early 2025 that reflects $13,505 with the 2b boxes checked.

One mistake I realized this year is that I did not include the $6,500 TIRA contribution in my 2023 tax year return that I filed in April 2024. I amended that return recently to include this.

I put $7,000 on my 2024 tax year return for a Traditional IRA. I walk through the steps for the Roth IRA and follow the prompts to indicate that the $13,505 in the TIRA was converted entirely to a Roth IRA. When I do this, it adds taxes owed to my return.

If I include the $6,500 in my total basis as of December 31st, 2023, Turbo Tax will calculate no taxes due on the backdoor Roth conversion.  Is this the correct approach even though I didn't contribute anything until early 2024? I did intend for the $6,500 to be classified as a 2023 contribution since it was prior to the April 2024 deadline.

To fix the 2023 tax year issue, do I fill out a Form 8606 and mail to my designated tax office? For 2024, do I need to fill out the same Form 8606 and include with my return submittal?

[AnnetteB6]

You mentioned that you amended the 2023 tax return to include the $6500 contribution for 2023.  If that amended return included Form 8606 showing that there is a basis in your Traditional IRA, then you do not need to fill out Form 8606 separately for 2023.  If the amended return did not include Form 8606, then you do need to fill it out now and mail it for the 2023 non-deductible contribution.

For 2024, when you enter the Traditional IRA contribution of $7000 into your return and show it as a non-deductible contribution, TurboTax will include Form 8606 automatically as part of your return.  You do not need to file the 8606 separately.

To make sure that the only portion of the conversion that is taxable is the $5 of interest, be sure to include the $6500 as basis in your Traditional IRA when the program asks if you made and tracked previous non-deductible contributions to your Traditional IRA.

[vjr2985]

Thank you. That's helpful. I added the $6500 to a traditional IRA in my 2023 amendment, so I'm not sure if Turbo Tax transmitted the 8606 in that amendment or if I need to manually.

Just to confirm, I will enter the $6500 as basis for previous non deductible contributions prior to 12/31/2023 even though I contributed to it in early 2024 (for the 2023 tax year)?

[DanaB27]

Yes, you will enter the $6,500 basis when TurboTax asks about the basis from prior years since the contribution was for 2023.