Incorrect 8606 calculation

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I am amending my 8606 for 2023 and I wonder if the 8606 calculation is wrong in TurboTax:

I made a late contribution to traditional IRA in Mar 2024 for 2023 backdoor. Previously I forgot to enter this $6500 in line 4 as I thought I made the contribution in 2023. So everything was wrong starting from line 9. After I entered $6500 in line 4, line 5 was correctly updated, but nothing was changed starting from line 9. IIUC, the line 5 change should affect line 10 which will affect all the following lines.

I noticed that in "Tax IRA Dist-T" worksheet which seems used by TurboTax internally to calculate 8606, it did not distinguish if the contribution I made is in 2023 or 2024. It may explain the reason why nothing was changed.

I am wondering if my understanding is correct. If so, how to fix this. If not, what did I misunderstand. Thank you!

[DaveF1006 · Accepted solution]

Nothing changed after Line 9 because Form 8606 separates your basis into two different time periods. Even though you made the contribution for 2023, the physical date was in 2024. According to the IRS instructions for Form 8606:

• Line 1: You report the $6,500 because it was a 2023 contribution.
• Line 4: You report the $6,500 again because it was physically made in early 2024.
• Line 5: You subtract Line 4 from Line 3.
• The Result: Your "Total Basis" (Line 5) for the 2023 calendar year drops to $0 (or whatever it was before you added the $6,500).

2. Why Line 9 and 10 didn't move

• Line 10 is the "Pro-Rata" fraction. It determines how much of your conversion is tax-free by dividing your Line 5 (Basis) by your total IRA value.
• Because Line 4 "pulled" your 2024 contribution out of the 2023 calculation, your Line 5 remains at $0. $0 divided by anything is $0.
• Therefore, Line 10 remains 0.000, and your 2023 conversion remains fully taxable on your 2023 return, like it should

3. Did you misunderstand?

• Your interpretation that "Line 5 affects Line 10" is 100% correct. The IRS doesn’t allow a cash inflow from 2024 to offset a cash outflow from 2023. Even if the contribution is marked “for 2023,” IRS rules say you didn’t have that “basis” available on the day you completed the 2023 conversion.
• The good news is, you haven't lost the $6,500 basis! It simply moves to your 2024 Form 8606.
• On your 2023 Form 8606, Line 14 will show $6,500.
• When you file your 2024 taxes or amendment, that $6,500 will show up on Line 2 (Total Basis from prior years). It will then be used to make your next distribution or conversion tax-free.

How to Fix This

If your goal was to have a $0 taxable conversion for 2023, you only have two options:

• Option A (The Truthful Path): Accept the 2023 tax hit. You will get the $6,500 tax benefit next year (2024) instead. This is the most common result of a "late" backdoor Roth.
• Option B (Verify the Conversion Date): Double-check your 1099-R. Did the conversion (the move from Traditional to Roth) actually happen in 2023?
• If the conversion happened in January–March 2024, it doesn't belong on your 2023 return at all.

If you remove the 1099-R from 2023, Form 8606 will only show Lines 1, 2, 3, and 14. This records your basis for 2023 and carries it forward to 2024 where the conversion occurred.

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Thank you for the prompt response! It is really helpful.

Regarding 2, I started backdoor in 2022 and I made a lot of mistakes: I have some leftover money in the traditional IRA by the end of year and my basis is also non-zero. So my line 5 is non-zero. That is the reason why I expected to see the value changes after I updated line 4.

Anyway I have to amend my 2024 tax return too. Really appreciate all the detailed explanations and help 🙂