How to report backdoor IRA from 2021

[VeeKey99]

I did backdoor IRA for 2021 after filling taxes. In addition, I did another backdoor IRA for 2022. I did not amend my 2021 taxes to report the conversion for 2021. 

Now I have two 1099-R from the brokerage, reducing my federal refund for 2022. How should I handle it? Should I amend 2021 taxes first and then file 2022 taxes with just one 1099-R?

[DanaB27 · Accepted solution]

Yes, you will have to amend your 2021 tax return and enter the 2021 nondeductible traditional IRA contribution. This will create Form 8606 with a basis on line 14 and this will be entered on your 2022 tax return (either in the IRA contribution section steps 9 and 10 or retirement section steps 11 and 12, see instructions below).

No, if you made the conversions in 2022 then this belongs on your 2022 tax return. And if you received 2 2022 Form 1099-Rs, they will have to be entered on your 2022 tax return (the only exceptions are if you have codes P or R in box 7 but that shouldn’t be the case for conversions).

To enter the nondeductible contribution to the traditional IRA:

1. Open your return
2. Click “Deductions &Credits” on the top
3. Click "I'll choose what to work on"
4. Scroll down to “Traditional and Roth IRA Contributions” and click “Start”
5. Select “traditional IRA”
6. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
7. Enter the amount you contributed
8. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
9. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had nondeductible contributions before this tax year
10. Enter your basis in the Traditional IRA from your 2021 Form 8606 line 14 (if you had a basis in the prior year)
11. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (if you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible).

To enter the 1099-R conversion: 

1. Click "Federal Taxes" on the top and select "Wages & Income"
2. Click "I'll choose what to work on"
3. Scroll down and click "Start" next to "IRA, 401(k), Pension Plan (1099-R)" 
4. Answer "Yes" to the question "Did You Have Any of These Types of Income?"
5. Click "I'll Type it Myself"
6. Choose "Form 1099-R, Withdrawal of Money from 401(k) Retirement Plans, Pensions, IRAs, etc."
7. Click "Continue" and enter the information from your 1099-R
8. Answer questions until you get to “What Did You Do With The Money” and choose “I moved it to another retirement account”
9. Then choose “I did a combination of rolling over, converting, or cashing out money.” and enter the amount next to "Amount converted to a Roth IRA account"
10. On the "Your 1099-R Entries" screen click "continue"
11. Answer "yes" to "Any nondeductible Contribution to your IRA?" if you had any nondeductible contributions in prior years.
12. Answer the questions about the basis from line 14 of your 2021 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

@VeeKey99