IRA Information worksheet and Backdoor Roth rolling basis

[mcintyre210]

Want to make sure I'm capturing the backdoor Roth basis as it grows so it's tracking correctly for future distributions and not taxed again.

First Backdoor Roth in 2023 created a basis of $7500 on the IRA Information Worksheet.  The $7500 was listed on Part I Traditional IRA line 3, Part II Roth IRA conversion lines 7 and 9.  Also line 36 and line 60.

Backdoor Roth in 2024 IRA Information Worksheet has the previous year $7500 for "Part I" Traditional IRA line 1, current year of $8000 on line 2 and total basis to carryover of $15500 on line 3.   "Part II" Roth IRA line 7 is $8000 and line 9 is $8000.  Part III line 12 says $7500 and line 17 $7500.   Line 36 is $8000 and line 60 is $8000.  Something seems off on line 7, 9 as well as there are no numbers in "Part V" ROTH IRA Conversion balances.  ???

My question is what all should the 2024 IRA Information Worksheet look like the 2nd year as I add more to basis to roll forward into 2025??  What lines need info and what info is missing?

[baldietax]

this is hard to follow, it's probably easier to focus on Form 8606

are you doing the Roth conversion part of the backdoor?  the basis should not be rolling and growing.

if you're doing backdoor Roth you should have a non-deductible contribution and a Roth conversion (reported on 1099-R), the basis should be zero at the end of this assuming you have no other pre-tax earnings in your IRA and bring the Trad IRA balance to zero.  There shouldn't be a rolling basis, unless you make the contribution after year-end for the prior tax year then all you report is the contribution which carries forward to the next year and the conversion is reported in that calendar year it's performed.

the most common issue I've seen reported here is folks don't identify the 1099-R as a Roth conversion properly in the questions which follow the form entry.

here are the steps for backdoor Roth in turbotax

https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-benefits/enter-backdoor-roth-...

[mcintyre210]

I'll check out the link.  I've done BD Roths in TT since 2020; however, I just got done amending returns 2020-2024 to capture pro rata on spouse Roth's due to owning a SIMPLE and having very poor guidance by the investment firm when we started doing the conversions due to income limits.  This pro rata mistake cost us $3200 and created a rolling basis on each next year's Form 8606 for the spouse.  The amendments were confirmed correct by our CPA.

With that said, I noticed the taxpayer ROTH now has a basis rolling forward as well - not sure what happened.  These BD Roth conversions are complicated in TT, especially with Pro Rata and having to override cells due to TT not asking the right questions in the wizard.  I'm an accountant and this whole scenario has been a very frustrating experience.  It's almost easier to hand do these forms than use the software.

For example, it took me an entire weekend to figure out that I had to call it a Traditional  and select "No" to the question  "Did you change your mind and convert this to a Roth" in the wizard.  Turns out you just enter the 1099-R and hope it reconciles.   And the 1099-R likely doesn't match your actual contribution. 

All of that said, is it not a good idea to have TT track basis though, in the IRA Info Worksheet?  My husband is now wondering if we should at least be tracking total Roth Basis somewhere in the tax return for future tax free distributions.

[mcintyre210]

I figured out my error.  I had missed line 8, 11, and 13 on the Form 8606 for the non pro rata taxpayer.  I'm showing a zero basis on line 14 now and not going to worry about the IRA Information Worksheet.