Correctly entering Traditional IRA and Backdoor conversion after previous year happenings

[moses0020]

@dmertz Sorry, but hoping you can clarify "no form 8606 part II was generated."

[moses0020]

For the heck of it I reinstalled TT 2022 and opened up a copy of my 2022 file. Going back into the IRA section, I think this is where I went wrong:

What did you do with the money:

• [SELECTED] Moved money to another retirement account (or returned it to the same retirement account)
• Did something else with it (Cashed out, etc.)

Choose which of the following applies:

• [SELECTED] Rolled over all of this money
• Did a combination of rolling over, converting, or cashing out the money
  • Assuming I needed to select this option instead??

[Opus 17]

Look at the form.  As I said, it's actually a fairly simple addition and subtraction problem.  Part 1 (Part I) is the front page that calculates your IRA basis.  Right on line 8 it says "Enter the net amount you converted from traditional, traditional SEP, and traditional SIMPLE IRAs to Roth, Roth SEP, or Roth SIMPLE IRAs in 2023. Also, enter this amount on line 16".  At the end of part 1, line 14 calculates your new basis and line 15 calculates the taxable amount of the conversion due to basis.  Line 16 is on the second page in part 2 (part II).   You list again the amount from line 8 (the conversion), then you list again the amount from line 11 (the non-taxable part of the conversion) on line 17, and then line  18 calculates any additional taxable amount (should be zero in your case).

If line 16 is blank, that means you did not report the conversion correctly on your 2022 return.  Same conclusion we can draw if line 8 is blank.  Means the same thing. 

[moses0020]

Got it, thank you for clarifying. I'll amend 2022.

Going back to 2021 and your previous comment. As you mention, given 8606 is wrong here too (in a different way) (e.g. Line 8 is blank and doesn't specify the conversion amount). However, Since line 14 has the updated basis (0), AND given the transcript looks OK, confirming I don't have to bother amending 2021?

[Opus 17]

@moses0020 

The 2021 transcript looks correct, even though your copy of form 8606 seems to not add up.  Since the transcript is ok, there is no reason to amend 2021. 

[moses0020]

I went ahead and started amending my 2022 return, I went through the sections related to IRA, with the following answers:

• Moved money to another retirement account
• Did combination of rolling over, converting, or cashing out
  • Specified Amount converted to Roth IRA: $6,000
• No, not in HSA
• No, Not qualified disaster
• No, I did not make and track nondeductible contributions to my IRA
• Total basis: 0
• Value of Traditional, Outstanding rollovers, recharacterizations: All 0

I also went through section within deductions & credits:

• Yes contributed to traditional ira
• No, not a repayment of retirement distribution
• Specified 6,000 as total traditional ira contributions
• Specified 0 between Jan 1 and April 15
• No, did not switch or recharacterize
• No Excess
• No, Did not make and track nondeductible contributions to my IRA
• IRA basis = 0
• Value of traditional IRA = 0
• IRA deduction summary = 0

Despite all of this, when I go back to view the updated 8606 form:

• Line 1: 6,000 (expected)
• Line 2: 0 (expected)
• Line 3: 6,000 (expected)
• Line 4: Blank (expected)
• Line 5: 6,000 (expected)
• Lines 8-12: Blank (Unexpected)
• Line 13: 6,000.*
• Line 14: 0 (expected)
• Line 15 c (taxable amount): 0*

I can't figure out why TT won't populate line 8 with the conversion amount. Below this it says " If line 15 has an asterisk*, quickzoom to view the calculation of the taxable and nontaxable portions of your distribution.". In doing so, I see A "Taxable IRA Distribution Worksheet" popup. Is this intentional? I also found mention of this in another thread "If there is a * (asterisk) next to line 15 then the calculations were done on the "Taxable IRA Distribution Worksheet" instead of the 8606 lines 6-13. This worksheet is described in IRS Publication 590-B worksheet 1-1.

https://www.irs.gov/publications/p590b#en_US_2020_publink[phone number removed]"

[Opus 17]

@moses0020 

That's Turbotax's internal IRA worksheet, not the actual form 8606. 

[moses0020]

@Opus 17Yea, and apparently TT doesn't automatically send it with the e-File. I'm trying to figure out why TT won't fill out the aforementioned fields (e.g. 8-12) in form 8606, and why it instead inserts an asterisk in lines 13 & 15 (referring to the worksheet).

I'm unsure if I can file the amended form as is (as long as basis is now correct), or if I explicitly need fields 8-12 filled.

[dmertz]

The asterisks indicate that TurboTax is using Worksheet 1-1 from IRS Pub 590-B instead of lines 6 through 12 of Form 8606 to calculate that nontaxable and taxable amounts because distributions from and nondeductible contributions to your traditional IRAs were made in the same year.

[moses0020]

Got it, so sounds like this is expected. Thanks all for the help. I believe the amended return is in a good place now, with a correct basis.

Looking back at the prompts, I think I always get tripped on the questionnaire for "Did you make and track non-deductible IRA contributions." I always want to hit yes thinking its talking about my normal in year contribution, without realizing its specifically talking about contributions for prior years.

[moses0020]

I've filed my amended 2022 return by certified mail. Hoping to confirm: Do I need to wait until the 2022 amendment is processed / accepted before filing 2023 taxes?

It was sent a month ago, and I suspect it may take a while for them to process. Is my only option asking for an extension for 2023 or can I proceed?

[dmertz]

There is no need to wait to file your 2023 tax return.  The processing of an amended tax return can take months.