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VAer
Level 3

Form 8606 Nondeductible IRAs

Before 2020: I only contributed to Roth IRA (I did not even have traditional IRA account), I think it does not need to be reported on tax return. I just used tax software, and I don't think it asks about Roth IRA contribution.

Year 2020: I contributed to both Roth IRA and traditional IRA, and I only reported traditional IRA contribution. At the end, the system generated form 8606 for traditional IRA contribution part, since it is not deductible due to my income.

Year 2021: I only contributed to Roth IRA. 

Year 2022: I am planning to contribute to traditional IRA (different financial institution from year 2020 traditional IRA contribution), then do backdoor Roth conversion. At this point, I am not sure if I am qualified for Roth contribution (not sure about income, salary only can qualifies me for Roth contribution, but not sure about stock trading performance till the end of year), therefore, I am planning to do backdoor Roth conversion now.

 

Question: I thought form 8606 is cumulative amount, but I don't have form 8606 for year 2021, how can I carry 2020 form 8606 amount to year 2022 tax return form?

 

To be simple: How should I fill out 2022 tax form based on above scenario? 

 

Thanks.

2 Replies
fanfare
Level 15

Form 8606 Nondeductible IRAs

Answer: not a problem - you only need the most recent 8606 (2020) to fill out your new 8606 (2022).

 

You won't be making a Roth contribution.. It is a Traditional IRA contribution and you make the non-deductible election or it is already non-deductible.

 

@VAer 

Critter-3
Level 15

Form 8606 Nondeductible IRAs

The form 8606 is only produced if it was used in that tax year which is why it is very important to save a copy of the 8606 with your IRA papers so that if you skip a year or more of  non deductible contributions or distributions/conversions you have the info needed for  use on an 8606 in future years.   

 

And FYI the program does allow (not requires) you to enter ROTH contributions into the system so it can keep the records  of your contributions and when they started for the 5 year rule.  Again an option not a requirement. 

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