Form 8606

[confused learning]

Hello!

I made a traditional IRA using Merrill Lynch in 2019 using post- tax dollars. In 2021, I had attempted the back door Roth IRA, and made another traditional IRA with Charles Schwabb using post tax dollars, converted it to Roth IRA within a few days, no gain was made prior to conversion. Based on filling the form 8606 #1, non-deductible contributions be $6,000, and #2, total basis in traditional IRA, be $12,000? And step 6, "value of all traditional, SEP, Simple as of December" be $6,000 or $12,000? It seems based on the pro-rata rule I would have to pay 50% on the traditional IRA. Any guidance would be appreciated. Thank you so much. 

[DanaB27 · Accepted solution]

No, you will need to look up your value on your end-of-the-year statements and enter this as "value of all traditional, SEP, Simple as of December 31, 2021". If you converted everything in 2021 then your value should be $0.

Yes, line 1 will be $6,000 (your 2021 nondeductible contribution). Line 2 will be your prior year basis (post-tax contribution from 2020 and prior years).

Yes, if you had pre-tax contributions in your traditional/SEP/SIMPLE IRAs then the conversation will be partly taxable because of the pro-rata rule. Earnings will be taxable as well.

[wen l bucher]

what is my base of my non deductible IRA 

[DanaB27]

Your basis is your nondeductible contribution to the traditional IRA. For example, if you contributed $6,000 for 2021 and made it nondeductible then TurboTax will create Form 8606 to report your basis. The basis for your 2021 nondeductible contribution is on line 1. If you had a prior year basis this is entered on line 2. Your total basis in traditional IRAs for 2021 and earlier years at the end of 2021 you will find on line 14 (this will be carried over to 2022 or enter it when asked about your basis before 2022 next year).

@wen l bucher