Form 8606: Backdoor Roth: How to enter correct Total basis of prior Year.

[sureshr]

Hi,

Request quick help please.

I am doing backdoor Roth for over 4 years and reporting through Turbo Tax. In 2020 it so happened that I contributed to Traditional IRA 6000$ in on Dec 24th 2020 and rolled all of it over to Roth IRA on Jan 1st 2021. When I am doing 2020 tax returns in Turbo Tax, I had a problem with 1099-R and a tax expert helped me to enter these amounts so that my federal tax due and state refund does not get effected. When I check FY 2020 Form 8606 column 14 "your total basis in traditional IRAs for 2020 and earlier years", it says 11000 instead of 22500. 

I did backdoor Roth in 2021 again (all in October including Roth conversion). When I am doing tax return for 2021, I answered Yes to "Any Nondeductible Contributions to IRA". Then I tried to enter "Total basis as of December 31, 2020 as 24000" instead of 12000. Is this right? 

If this is right and I proceed further it is asking me "Prepare an Explanation" since the basis is changed from 2020 to 2021. Also the California Refund bumped due to the value basis I entered, which I am not supposed to receive I guess. Please suggest what to do.

FY 2017:

I contributed $5500 after tax money to Traditional IRA and did back door Roth to Roth IRA.

Form 8606: Box 14:  This is your total basis in traditional IRAs for 2017 and earlier years -- $5500

FY 2018:

I contributed $5500 after tax money to Traditional IRA and did back door Roth to Roth IRA.

Form 8606: Box 14:  This is your total basis in traditional IRAs for 2018 and earlier years -- $11000

FY 2019:

I contributed $5500 after tax money to Traditional IRA and did back door Roth to Roth IRA.

Form 8606: Box 14:  This is your total basis in traditional IRAs for 2019 and earlier years -- $16500

FY 2020:

I contributed $6000 after tax money to Traditional IRA in Dec 2020 and did back door Roth to Roth IRA in Jan 2021. Since the 1099-R balance still showing $6000 and for some reasons that I forgot turbo tax expert helped me to answer back door Roth questions.

Form 8606:

Box 1: 6000.    Box 2: 16500.      Box 3: 22500.     Box 5: 22500     Box 13: 11000

Box 14:  This is your total basis in traditional IRAs for 2020 and earlier years -- $11000

My total non deductible IRA contributions are $22500 not Box 14 $11000 from previous year 8606. This is the issue.

Thanks in advance.

[fanfare]

@sureshr 

To do a Roth Backdoor conversion properly you have to convert entire Traditional IRA as the last step.

That brings your prior years basis to zero.

In each of the years listed, your IRA prior years basis shows an increase.

This means the Form 8606 you filed for each of those years was incorrect.

Are you doing your own forms manually.?

I don't see how you can get those results using TurboTax

TurboTax would not allow it.

[sureshr]

Please review this https://ttlc.intuit.com/community/taxes/discussion/re-how-do-i-enter-a-backdoor-roth-ira-conversion/...

Backdoor Roth Non deductible contributions to be tracked in 8606 every year, only then you can distribute the contribution without any impact when you want. This is my understanding confirmed by turbo tax expert

[fanfare]

This thread a duplicate of question posed on other thread named above.

 I'm not going to argue with you on this thread when you are posting questions on another thread.