Issue with 2020 Tax Return – Incorrect Form 8606 & Impact on Later Years

[pfAKaQYRwG]

I am filing my 2024 taxes using TurboTax Premier (online) and encountered a question about my Traditional IRA basis as of 12/31/2023. While reviewing my past tax filings, I noticed a potential issue with my 2020 tax return, specifically Form 8606.

---

Background of My 2020 IRA Contributions & Tax Filing

• 2020 Tax Filing Status: Married Filing Jointly

• 2020 Adjusted Gross Income (AGI): $203,122 (from Form 1040, Line 11)

• Covered by a Retirement Plan at Work?: Yes, I was. My wife was not.

• MAGI for Roth IRA Purposes: Same as AGI ($203,122)

  • Confirmed by going through this link: https://turbotax.intuit.com/tax-tips/irs-tax-return/what-is-the-difference-between-agi-and-magi-on-y...

• Roth IRA Contribution Limit for 2020: $1,730 (Correctly contributed this amount)

  • Confirmed by going through this link: https://www.irs.gov/pub/irs-prior/p590a--2020.pdf

• Deadline to Make 2020 IRA Contributions: April 15, 2021

• Actual Contribution Dates & Issues:

  Date	Notes	From	To	Amount	Deductible?
  4/19/2021	Contribution for 2020	Bank of America	Traditional IRA	$4,270	Marked as Deductible
  4/19/2021	Contribution for 2020	Bank of America	Roth IRA	$1,730	N/A (Direct Roth Contribution)
  4/28/2021	Backdoor Conversion	Traditional IRA	Roth IRA	$4,270	N/A (Converted)

• Key Mistake: I contributed $4,270 to a Traditional IRA for 2020 after the deadline (April 15, 2021), which means it should have counted for 2021 instead. However, I mistakenly treated it as a 2020 contribution on my 2020 Form 8606.

• Form 8606 Issue:

  • Lines 1, 3, and 14 were incorrectly entered as $6,000.

  • I now believe these should have been $0, since my AGI was too high for a deductible contribution, and I had no true non-deductible basis from 2020.

---

Later Years & Traditional IRA Basis

• 2021: No IRA contributions (Traditional or Roth).

• 2022: $6,000 backdoor Roth IRA contribution (contributed and converted in 2022).

• 2023: $6,500 backdoor Roth IRA contribution (contributed and converted in 2023).

• 2024: $7,000 backdoor Roth IRA contribution (contributed and converted in 2023).

• 12/31/2021 Traditional IRA Balance: $0.01

Since my Form 8606 for 2020 was wrong, I am concerned about its impact on 2021, 2022, 2023, and 2024 filings, especially regarding my Traditional IRA basis and backdoor Roth IRA conversions.

---

Questions:

1. How do I correct my 2020 Form 8606?

   • Should I file an amended return (Form 1040-X) for 2020?

   • If yes, what specific changes should I make to Form 8606?

2. Do I need to adjust my tax filings for:

   • 2021, 2022, 2023, and 2024 due to this error?

   • If so, how should I approach these corrections?

3. Can this be done using TurboTax Premier (online version)?

   • Or do I need to file a manual 1040-X and Form 8606?

Any guidance on how to fix my 2020 return and ensure my 2024 return is correct would be greatly appreciated!

Can this be done while I am doing my 2024 taxes using TurboTax online premier version?

[RobertB4444 · Accepted solution]

2020 is a closed year.  There is no point in filing a tax return for 2020 to correct this error.  

You should correct your records to reflect the difference between the reported contribution and actual contribution and maintain them but there is no point in reporting this.  The amount was moved to the Roth in 2021 according to what you put up there and so it was a backdoor Roth contribution and not a deductible IRA contribution.  So there is not an overcontributed amount that has been sitting in your traditional IRA for years.  

The only issue is the deduction for 2020 that you received and should not have.  Since that is the case this issue is closed already.  

If you decide that you have to amend the return because you won't feel right otherwise you will need to download forms from the IRS website to do the amendment and copy all of the numbers from your copy of your 2020 return.  (You may also be able to find copies of 2020 TurboTax software on eBay.)  There is no online support for an amendment from that far back.

@pfAKaQYRwG 

[dmertz]

"Deadline to Make 2020 IRA Contributions: April 15, 2021"

Incorrect.  Due to the COVID pandemic, the IRS extended the deadline to May 17, 2021.