Form 8606 from Turbo Tax 2021 not populating correctly

[bdroth]

I'm wondering if there was a bug in the Turbo Tax 2021 causing the Form 8606 to not populate correctly?  I'm only realizing this now because my total basis in traditional IRAs for 2022 and earlier years isn't what I expected it to be ($6000, because I always do late backdoor roth conversions for the prior calendar year).  I went back to Turbo Tax 2021 and noticed that Line 1 and Line 4 on Form 8606 were inadvertently left blank, but I realize this could be corrected by entering values into the IRA  Contrib Wks (Line 1 and Line 11) from the Forms section.  Why did I have to manually enter this into the IRA Contrib Wks when I answered all the questions prompted by Turbo Tax?  Do I need to file an amended tax return for 2021 since my Form 8606 was incorrect, and can this be done through Turbo Tax?  It seems the workaround for 2022 is to just manually change the total basis (Line 14) from $0 to the $6000 it should be.  Turbo Tax asks for an explanation in the prompting but doesn't seem to actually require one. 

Thank you!

[DanaB27 · Accepted solution]

Yes, it would be best to file an amendment. Please see How do I amend my federal tax return for a prior year?

To confirm in 2021 you made a nondeductible traditional IRA contribution for 2020  before the 2020 due date and then converted this in 2021. And in 2022 you made a nondeductible traditional IRA contribution for 2021 before the 2021 due date and then converted this in 2022.  You also made a contribution for 2022 in 2023.

If yes, then you should have reported the contribution on your 2020 tax return and had a $6,000 basis on your 2020 Form 8606 line 14. This amount should have been entered in your 2021 tax return.

For your 2021 tax return, you should have entered the following steps:

To enter the nondeductible contribution to the traditional IRA:

1. Open your return
2. Click “Deductions &Credits” on the top
3. Click "I'll choose what to work on"
4. Scroll down to “Traditional and Roth IRA Contributions” and click “Start”
5. Select “traditional IRA”
6. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
7. Enter the total amount you contributed for 2021 and the amount contributed for 2021 from January 1, 2022, through April 18, 2022.
8. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
9. 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
10. Enter your basis in the Traditional IRA from your 2020 Form 8606 line 14 (if you had a basis in the prior year)
11. 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 the 1099-R conversion: 

1. Click "Federal Taxes" on the top and select "Wages & Income"
2. Click "I'll choose what to work on"
3. Scroll down and click "Start" next to "IRA, 401(k), Pension Plan (1099-R)" 
4. Answer "Yes" to the question "Did You Have Any of These Types of Income?"
5. Click "I'll Type it Myself"
6. Choose "Form 1099-R, Withdrawal of Money from 401(k) Retirement Plans, Pensions, IRAs, etc."
7. Click "Continue" and enter the information from your 1099-R
8. Answer questions until you get to “What Did You Do With The Money” and choose “I moved it to another retirement account”
9. 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"
10. On the "Your 1099-R Entries" screen click "continue"
11. Answer "yes" to "Any nondeductible Contribution to your IRA?" if you had any nondeductible contributions in prior years.
12. Answer the questions about the basis from line 14 of your 2020 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

You will use the same steps on your 2022 tax return (using your new 2021 Form 8606).

Your Form 8606 should have these entries for 2021 and 2022 (assuming each contribution was $6,000 and your value at the end of the year was $0):

Line 1 $ 6,000

Line 2 $ 6,000

Line 3 $12,000

Line 4 $ 6,000

Line 5 $ 6,000

Line 14 $ 6,000

[bdroth]

@DanaB27 Thank you so much. You understood my situation perfectly and told me exactly what I need to do. I really appreciate your help and can't believe how amazing this forum is. 

[bdroth]

@DanaB27 I'm trying to file my 2021 amendment to correct the 8606 form.  When I attempt to file, TurboTax 2021 tells me to "Correct my signature date" and that it should be between 1/1/2022 and 12/31/22. Does this mean I cannot e-FILE and have to actually print out all the forms and mail it in?  

Also, can I just do the amendment for federal and not for the state, or do I need to do both?

Thank you!  

[DanaB27]

Yes, you can only amend your federal return, if your state return doesn't change then you don't need to amend it.

The has been an issue with e-filing prior year amended returns but it should hopefully be resolved after April 10th. Please try again after April 10th.

Another option is to print and mail your amended tax return.

[Edited 3/29/2023 | 9:22 am PST]

@bdroth

[TaxFiler17]

Problem: Form 8606, Part I, lines 6-12 are not populating. 

Background: In 2022, I did a back-door Roth IRA Conversion.   I made a non-deductable contribution to a traditional IRA, then a non taxable distribution from that IRA.  This distribution was then converted to (put into) a Roth IRA. 

On form 8606, Part I, lines 6-12 are not populating.  Line 10 has an "X".  Line 13 correctly lists the nontaxable portion of the distribution, but it has an asterisk "*".  Line 15C lists the taxable amount as 0 with an asterisk "*".  In Part II, line 16, lists the correct amount converted from traditional IRA to Roth.  Line 17 lists the basis as the full amount of the conversion amount listed on line 16.  Line 18 lists the taxable amount as 0 with an asterisk "*".  

The results on the form seem correct, however, I am concerned that it is not fully filled in.  Will this be an issue for the IRS?  Can you tell me how to complete the form?  Thank you!

[fanfare]

The "*" means TurboTax used a different worksheet to arrive at the those numbers.

I forget the name of the worksheet.

you can e-File it.

@TaxFiler17 

[bdroth]

@DanaB27 Hello again, I just tried to efile my amended 2021 federal tax return again today on 4/10/23 but I'm still getting the message that my signature date should be on or after 1/1/2022-12/31/2022. Is there a new estimated date on when this e-filing option may be fixed?  Thank you!

[CarissaM]

Not all amended returns can be e-filed, as explained here. 

If it is not allowing an e-file, you will need to print the amended return and file by mail. 

Please let us know if we can assist you further. @bdroth