Help With Form 8606 and Backdoor Roth

[1000r]

I filed my 2019 1040 in mid March 2020 At the end of March I decided to do a back door Roth for both 2019 and 2020. My 1099-R correctly states that my gross distribution is $14,000. I don't know how to fill in form 8606 to indicate that $7,000 was contributed to a traditional IRA and then converted to a Roth (for 2019)  and $7,000 was contributed to a traditional IRA and then converted to a Roth (for 2020).

[macuser_22 · Accepted solution]

You must enter the 2020 contribution in the IRA contribution interview that will but it on the 2020 8606 line 1.

You must have the 2019 8606 with the 2019 contribution on line 1,3 and 14.  

When entering the 2020 1099-R:

You will be asked of you had and tracked non-deductible contributions - say yes. The enter the amount from the last filed 8606 form line 14 if it did not transfer. Then enter the total value of any Traditional, SEP and SIMPLE IRA accounts that existed on December 31, 2020.

That will produce a new 8606 form with the taxable amount calculated on lines 6-15 and the remaining carry-forward basis on line 14.

NOTE: If there is an * next to line 15 then 6-14 will be blank and the calculations will be on the "Taxable IRA Distributions worksheet instead.

[1000r]

Thanks for the reply. I am still confused. Since I made the conversion from IRA to Roth in March 2020 for the 2019 tax year, I do not have a 2019 8606.

[macuser_22 · Accepted solution]

Then you did not report the 2019 IRA  non-deductible contribution on your 2019 tax return and cannot use it until you do with an amended 2019 return  that includes the required 2019 8606 form.   Without the 2019 8606 the 2019 contribution to offset the conversion tax will be disallowed.

[1000r]

Thanks for the help. I went back to 2019 and amended the return to show a $7,000 IRA contribution. I now have an 8606 for 2019. But, I already entered all of my tax information for 2020 into Turbo Tax. Is there any way of letting the 2020 Turbo Tax know about the 2019 8086 without having to start my 2020 taxes over from the start?

[macuser_22]

Yes just go to the 1099-R interview and edit the 1099-R and go through the interview.

Enter a 1099-R here:

Federal Taxes,
Wages & Income
(I'll choose what I work on - if that screen comes up)
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR Use the "Tools" menu (if online version left side) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]

You will be asked of you had and tracked non-deductible contributions - say yes. Then enter the prior amount from the last filed 8606 form line 14 if it did not transfer. Then enter the total value of any Traditional, SEP and SIMPLE IRA accounts that existed on December 31, 2020.

That will produce a new 8606 form with the taxable amount calculated on lines 6-15 and the remaining carry-forward basis on line 14.

NOTE: If there is an * next to line 15 then 6-14 will be blank and the calculations will be on the "Taxable IRA Distributions worksheet instead.

[1000r]

You've been very helpful. I have one more question. As I go through the "Deductions and Credits" / "Traditional and Roth IRA Contributions" section, do I mark the $7,000 from 2019 as "nondeductible"?

[macuser_22]

Yes, it you want to apply it to a "backdoor Roth".     Otherwise if you qualify for a deduction it will increase your 2019 refund, but will be taxable when converted to a Roth.   That tax will be more than the refund.