Backdoor Roth Contribution in arrears

Forum|Forum|3 years ago
March 6, 2023
1 reply
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Hello,

Have read quite a few related posts but have not come across my exact situation and am struggling with how to record backdoor roth for 2021, 2022, and 2023. Contributed 7K twice so far. Early in 2022 (applied to 2021) and then again early 2023 (applied to 2022). Our income is too high for regular roth and we are over 50 years old so did backdoor both times (I believe it is considered a recharacterization ?). I'm confused as to which tax year we include which amounts and how to record it in the tool as I didn't get a 1099R in 2021, I got one late in 2022 after I filed the 2021 taxes. Do I need to amend my 2021 tax return (we got a refund) or could I potentially submit a 8606 on its own for 2021? I also need to determine how to handle it for 2022 as well, this time before I submit our taxes (step by step help ideal). 2021 was done via online version. This year I got desktop as was told it was better to work with given the situation. I even upgraded to professional help and after an hour the person on the phone couldn't help me. Appreciate any help you can provide. Thanks.

MaryK4

Level 15

You will want to file the Form 8606 for 2021- and you are correct that you can send it separately to the address on the form instead of a full amendment. You can use TurboTax to amend the 2021 to create the 8606 then print and mail the 8606 only (follow the same steps for this year's entry). The directions for entering the 2022 Backdoor: How do I enter a backdoor Roth IRA conversion?

If you need help while you are in TurboTax, add to this thread or start a new one- there are lots of experienced TurboTax users that can help with specific questions.

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kam349Author

Level 2

Thanks for help! Two follow up questions if I could:

1) Hopefully filled out the 2021 8606 correctly to set up for 2022. Essentially captured $7000 in 'basis for 2021' (amount given early 2022 but applied to 2021), submitted it separately. Over 50 years old.

2) Now that I've input everything in for 2022 tax year, is there a way in the forms or anywhere I can validate things were captured correctly before I submit? For example - nothing shows under income for retirement distribution - should it? Secondly under IRA deductions it shows traditional IRA basis total as $7000, and basis carryover as of 12/31/22 as $14,000. Does that sound right (7000 from #1 above plus another 7000 we applied to 2022 but didn't give until Feb 2023)?

Thanks for time.

DanaB27

Level 15

You should have the $7,000 basis listed on your 2021 Form 8606 lines 1, 3, and 14 (assuming you didn't make any conversion in 2021).

Your 2022 Form 8606 should have $7,000 on lines 1 and 2. $14,000 on line 3. $7,000 on line 4 and $7,000 on line 5.

On Form 1040 you will have the distribution amount from Form 1099-R on line 4a and the taxable portion will be on line 4b (if you didn't have any earnings before the conversion then this will be $0).

To enter the nondeductible contribution to the traditional IRA for 2022:

Open your return
Click “Deductions &Credits” on the top
Click "I'll choose what to work on"
Scroll down to “Traditional and Roth IRA Contributions” and click “Start”
Select “traditional IRA”
Answer “No” to “Is This a Repayment of a Retirement Distribution?”
Enter the amount you contributed and the amount contributed in 2023 for 2022
Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had nondeductible contributions before this tax year
Enter your basis in the Traditional IRA from your 2021 Form 8606 line 14 (if you had a basis in the prior year)
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 Form 1099-R for the conversion:

Click "Federal Taxes" on the top and select "Wages & Income"
Click "I'll choose what to work on"
Scroll down and click "Start" next to "IRA, 401(k), Pension Plan (1099-R)"
Answer "Yes" to the question "Did You Have Any of These Types of Income?"
Click "I'll Type it Myself"
Choose "Form 1099-R, Withdrawal of Money from 401(k) Retirement Plans, Pensions, IRAs, etc."
Click "Continue" and enter the information from your 1099-R
Answer questions until you get to “What Did You Do With The Money” and choose “I moved it to another retirement account”
Then choose “I did a combination of rolling over, converting, or cashing out money.” and enter the amount next to "Amount converted to a Roth IRA account"
On the "Your 1099-R Entries" screen click "continue"
Answer "yes" to "Any nondeductible Contribution to your IRA?" if you had any nondeductible contributions in prior years.
Answer the questions about the basis from line 14 of your 2021 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs