How does it work if traditional IRA contribution year and Roth conversion from different calendar years?

[VAer]

Just make up an example.

I always do backdoor Roth conversion immediately after traditional IRA contribution, so there is no gain from traditional IRA. Let us say, I don't have enough money to make $7000 IRA contribution limit in 2024 for year 2024, let us assume I made $4000 to traditional IRA in 2024 for year 2024, and I converted the $4000 from traditional IRA to Roth IRA.

Then I made another $3000 in March 2025 for year 2024, then converted $3000 to Roth IRA again. And I also make $7000 contribution to traditional IRA in 2025 for year 2025, and convert $7000 from traditional IRA to Roth IRA.

So I make $10k roth conversion in 2025, and $3k is for year 2024 contribution and $7000 is for year 2025 contribution.

How will tax filing work in such case (just making an example)?

Thanks.

[Bsch4477]

You made a total contribution of $7,000 for 2024 which is reported on your 2024 return. Your $4,000 conversion is also reported that year. For your 2025 return you contributed $7,000 and converted $10,000. 

[VAer]

@Bsch4477

TThat is what I said in the post. My question is how camplicated to turn the information on tax return form, how to fill out tax return form. Those are I wanted to know. 

[baldietax]

this is all handled on Form 8606, suggest working thru that for your situation.

For 2024 filing Form 8606, the additional 3k 2024 contribution made in 2025 is included in line 1, but then set aside by subtracting it on lines 4/5 and not included in the tax calculation for the 4k Roth conversion.  The 3k basis left behind that wasn't converted in 2024 is then carried over to 2025.

For 2025 filing Form 8606 you would have the 3k basis carried over from 2024, plus the 2025 contribution of 7k so have a total basis 10k, and a conversion for 10k.

[VAer]

@baldietax  Thanks for explaination, as long as it does not cause me paying extra tax (2025 Roth conversion amount $10k greater than $7k contribution limit), then it will be fine.