Form 8606 line 14 starting tax year 2021

[taxtattoo]

I have been doing backdoor roth for more than 10 years. However, starting tax year 2021, I noticed that turbotax is capturing the amount on line 14 for form 8606. 

This is the amount on line 14 for each of the years:

year 2021- $6,000

year 2022- $12,000

year 2023 - $18,500

year 2024 - $25,500

I have always moved the balance from my traditional ira into roth. However, i noticed that I did not move interest paid on the traditional ira balance into roth by the end of the year, so there was a balance carried over to the next year. Could this be causing an issue?

Is the amount shown on line 14 for each of those years correct, or do I need to re-file the form for any of the prior years? My understanding was that as long as I move the money into roth, the balance on line 14 should be 0.

I plan to move all the interest paid for this years contribution into roth this year itself, so the balance on my traditional ira will be 0. 

Could I possibly have double paid taxes on this balance for any of the prior years because of this balance on line 14?

[baldietax]

Yes this looks incorrect if you've been doing backdoor Roth, the basis carryover on Line 14 needs to be going to zero and not accumulating this way (or close to zero if you have residual earnings - see below).  You may have paid tax on the conversion - check what was reported on Line 18 or 1040 Line 4b.  If you did pay tax then unfortunately it may be too late to get refund back on 2021 and the deadline for 2022 refunds is April.  You shouldn't need to wait to amend all your returns before you can file 2025, but you need the correct carryover basis from 2024 to input into Turbotax for Form 8606 Line 2.

Form 8606 Line 6 should reflect your year-end market value and Line 8 should show the Roth conversion amount.  If you're not getting the basis drawn down I'm guessing Line 8 is not reflecting the Roth conversion for some reason.  There are questions after the 1099-R input to identify the distribution as a Roth conversion.

The residual market value at year-end due to earnings will result in some tax and basis carryover, as the conversion is considered drawn from pre-tax and after-tax (basis) in a pro-rata manner, which is what 8606 Lines 6-12 will calculate.  If you don't get it to $0 e.g. say just $1 left at year-end you will end up with a $7000 conversion being $6999 tax free, $1 taxable, and that $1 is carried over as basis for the next year (you never pay tax on the non-deductible contributions it's just a question of timing).  When you finally clear out the IRA you should have a case where the amount of the conversion is higher than the basis and that will get the basis cleared out to $0 - see attached article with example of what Form 8606 will look like.

https://www.whitecoatinvestor.com/pennies-and-the-backdoor-roth-ira/

Here are the instructions for how enter backdoor Roth (updated for 2025 - Desktop questions have changed this year to match Online more closely but the general process remains the same).

https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-benefits/enter-backdoor-roth-...

[taxtattoo]

Thanks for the info. I checked line 4b on my 1040, and fortunately, that amount is 0 for all tax returns, so I did not pay additional tax. However, line 14 from form 8606 seems to be carrying forward this cumulative amount starting year 2021, so that bumped up $25k as of 2024.

Do I have to amend the tax return for just year 2024? What if for the year 2025, I manually adjust this value to 0? Would that suffice?

[baldietax]

I don't know offhand what would have caused you to have no tax on the Roth conversion yet still carry over the basis.

Putting $0 in for the basis for 2025 may not be the right answer if you were carrying some earnings along in the IRA through these years it could be an odd amount, the only way to know is to correct all the prior year calculations.

So I think you need to go back starting with 2021 and do the amended Form 8606 to figure out what the problem was to begin with, and get the right carryover basis, and do the same for each subsequent year to confirm the final basis carryover from 2024 for your 2025 return.  I don't think you need to get all the amendments filed with IRS before you can file your 2025, but you do need to back over all the calculations first.  I think if tax is not affected you would still file 1040-X along with the updated Form 8606.  You'll need to deal with State also.

Hopefully you are using TT desktop and have the old programs - 2021 is no longer supported but if you have it installed it should still work, the other years are still supported.  Otherwise you may need to do it by hand.  The amendments need to be paper filed if using TT either way.  When amending returns you should save a copy of the original .tax file (and PDF with all forms and worksheets for your records), before doing the amendment process and save that as a different .tax file, otherwise you will overwrite the original return.

Not a CPA so I can't advise on all the requirements to address this and ramifications but hope that helps.  Adding in the resident experts for further advice

@dmertz @DoninGA @VolvoGirl @Mike9241 @mesquitebean 

[dmertz]

The fact that your basis in nondeductible contributions has been carrying forward implies that you have not been reporting your Roth conversions.  Perhaps when entering the Forms 1099-R you've been reporting them as rollovers rather than Roth conversions.

[taxtattoo]

I went ahead and downloaded the year end statements for my traditional IRA from fidelity. Starting in 2021, I see the year end statement had a few cents, which I did not convert to a roth ira. I am not sure if this is an issue with TT or it is the way I answered the questions. It started carrying over the entire contribution as the basis, every year since 2021. However, the basis is not capturing any of the interest, it is only capturing my initial contribution.

For the year ending 2025, my traditional ira had a balance of $7.38. Should this be the amount on line 14 in form 8606 for the tax year 2025? If I convert this $7.38 into roth, I would have to pay tax for this amount. In this case, would the line 14 amount of 0 for the current (2026) tax filings?

Thanks for the support.

[taxtattoo]

In order to amend, should I file just form 8606 for each of the years? Do I also need to file 1040 for each of the years from 2021? There is no change to income or tax, since only the basis needs to be adjusted. Also, do I have to use software or can I manually fill out the 8606 forms? Not sure if I can access all the previous years software.

Can I send all of them in one envelope or do I have to mail them separately?

[dmertz]

I would amend each of those years to include a corrected Form 8606 and a Form 1040-X.  The Forms 1040-X will either show that there was no change in the taxable income or a slight change in the taxable income due to the small amounts of year-end balance due to the traditional IRA contributions earning interest before being converted to Roth.  (Amounts under $0,50 round down to zero, so those amounts won't cause any changes.)

The forms can be prepared manually.  It probably makes sense to send them all together because of the way one From 8606 carries forward to the next.  There is a small chance that nonzero increases in taxable income will change tax liability, so you might have a balance due with any particular amendment.

[taxtattoo]

Thanks for the responses dhertz and baldytax (sorry if I got the usernames incorrect).

I fixed the previous years for 8606. My tax basis is now down for $25,0000 to $10. However, I am still struggling with turbotax for year 2025. In the wages section, I entered the contribution of $8000 and I converted all the amount to a roth. However, the $8000 is not carried onto the line 1 in form 8606. 

All of this amount is now carried into form 1040 as taxable. Why is this so hard in Turbotax? I have been doing taxes for a long time, so form 8606 by itself cannot be rocket science for me to understand the basic questions. If it is an issue with software, other people should also have the same issue.  Please let me know what could be wrong? Thanks!

[baldietax]

how are you inputting the contribution, it should be under Deductions & Credits not Wages section; should be following these steps

https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-benefits/enter-backdoor-roth-...

[fanfare]

To send only Form 8606 with Form 1040-X get, a prior year Form 1040-X at IRS.gov with a signature line.
 Note: If you aren’t changing any dollar amounts on Form 1040-X, you don't have to do column A B C.
You can leave all Lines 1-23 EMPTY.

This won't work for a 2025 amendment; IRS has changed the rules for 1040-X.

Form 1040-X (12/2025)
New attachment requirement.

For paper-filed Forms 1040-X, you must attach, to your completed Form 1040-X, a completed and updated Form 1040, 1040-SR, or 1040-NR, with your changes. Don’t attach a copy of your original return, correspondence, or other items unless required to do so

--

This is the latest one I found:

https://www.irs.gov/pub/irs-prior/f1040x--2021.pdf

--

The new instructions don't mention signature, but 1040-X has no signature line,

implicating you should sign your revised 1040.

@taxtattoo 

@dmertz 

[taxtattoo]

For Desktop version, the instructions include entering info in both Deductions and Wages. Does it matter which order I enter the info? Maybe i have to  try deleting and re-entering.

[taxtattoo]

I deleted the 1099-R import under wages. It brought down my taxes, but also it deleted the form 8606, no mention of IRA, even though the IRA information is added under Deductions.

I then re-imported the 1099-R under wages. Turbotax said I do not owe taxes based on the info entered. However, the contribution amount is not carried to line 1 in form 8606. The amount shows up under line 4b in 1040, and the AGI is added for the amount.

It does not let me modify and enter the contribution amount in line 1 of the form 8606. I am kind of lost and not sure where to go. Do I have to pay $60 for live support? If this is something they can go guide me, I will be happy to do that, but hoping it is any easy fix and TT should be able to guide with proper questions.

[baldietax]

@taxtattoo I don't think you should need live support for this - are you following the steps in the link

https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-benefits/enter-backdoor-roth-...

What have you input in the Deductions & Credits section?  8606 Line 1 is driven from the questions in the Traditional IRA contribution section.  Sounds like you don't have the contribution entered.  After you input the contribution you will get questions to confirm your basis carryover (8606 Line 2).

It doesn't matter which order you enter 1099-R or the contribution in, it will just affect how the tax owed changes until you're done with both.  If you enter the 1099-R without the non-deduction contribution it will get taxed on 1040 4b which is what you're describing.  When you enter the contribution the tax will come back down.

Note after you've input the 1099-R you will get a summary screen of your 1099-Rs.  You then need to click Done or Continue to get the further questions to identity the 1099-R as a Roth conversion.

[taxtattoo]

@baldietax Yes, the contribution amount is entered as a traditional IRA contribution. I also entered the basis, which is carried into line 2 of form 8606 without any issues. I cannot be the only one having this issue. I am using Windows desktop version.

I have taken some screenshots which I am attaching here.