Late Backdoor Roth Conversion last year

[bfetzer81]

hi all - anyone successfully completed their form 8606 with the ONLINE version of Turbo Tax when doing a late backdoor Roth IRA conversion?

I converted 6k for 2020 and 6k for 2021 both in January of 2021. Now trying to file for 2021. I submitted the 8606 correctly for 2020 which shows a cost basis of 6k

The Form 8606 should look like this: https://www.whitecoatinvestor.com/ba...tutorial/#late

However I cannot get Turbo Tax to complete lines 7-11 on 8606. The rest of it appears correct except this part.

Appreciate any advice!

[MaryK4]

You need to enter your nondeductible traditional IRA contributions under Deductions & Credits (see below).  This will create the missing 8606.  It wounds like you have the 1099-R Roth entry correct so post if this does not work or you need any other help.

Backdoor Roth IRAs are not a special type of account. They are Roth IRAs that hold assets originally contributed to a regular IRA and subsequently held, after an IRA transfer or conversion, in a Roth IRA.  A Backdoor Roth IRA is a legal way to get around the income limits that normally prevent high earners from owning Roths.

[bfetzer81]

Thank you.  Sorry if I was not clear - I have already entered enter my nondeductible traditional IRA contributions under Deductions & Credits via my 1099-R.

I have the Form 8606 generated.  My problem is that lines 8-12 on 8606 remain blank.   My understanding is they are supposed to be filled out, however I cannot seem to enter anything in Turbo Tax that generates these lines 8-12 entry fields to populate.

But perhaps this is ok to have them blank if the rest is filled out, as below? That is my question.

[MarilynG1]

If lines 13 and 15 have an asterisk, it means that TurboTax tax used the separate Taxable IRA Distribution Smart Worksheet to do the calculation because you made traditional IRA contributions and distributions in the same year. 

TurboTax leaves lines 6 through 12 blank if it uses the separate worksheet.

[bfetzer81]

I see - so these lines 6-12 are just for calculation, and do not have to be filled out on the 8606 form as long as the rest of the lines (13-17) are done correctly?

[DanaB27]

Yes, that is correct. As MarilynG1 stated TurboTax tax used the separate Taxable IRA Distribution Smart Worksheet to do the calculation and therefore lines 6-12 can be left blank.

[hkTor22]

Hi - Please help on the same topic to me too. Here is my situation.

I contributed $6000 to Traditional IRA in 2021, and then converted the same into ROTH IRA in 2021. I don’t have any Traditional IRA basis prior to 2021. Now, I am trying to fill up the 8606 and have few issues.

My current form 8606 looks as below:

The issue above is in Part -I – line 8 is not populated when it clearly says enter the amount you converted to ROTH IRA. Now – I understand the “Taxable IRA Distribution Worksheet” will have the calculations, but the Part – II – line 16 is empty too.

Now, if we look in the “Taxable IRA Distribution Worksheet” itself, here is how this looks. The amounts in line 5 & 6 are reversed, meaning the line 5 should say 0; and line 6 should say 6000, correct?

[bfetzer81]

Yes - Your worksheet line 5 should be 0 and line 6 should be $6,000 (They are reversed). You somewhere entered in Turbo Tax you took a 6k distribution from your IRA - you did not do this, you only made a contribution, so it's getting calculated incorrectly.

Try this link which walks through how to report the Turbo Tax backdoor Roth step by step.  Id say you need to re-do these steps.

https://thefinancebuff.com/how-to-report-backdoor-roth-in-turbotax.html 

Now, assuming you made a year 2021 $6,000 Backdoor Roth conversion all within the calendar year 2021 (I.ie not a 'late' backdoor)   Your lines 1,3,5,13 should all have this amount.  This looks correct. However lines 16 and 17 should also be $6000 and line 18 zero (or blank)   

 As an aside,  My understanding is the 'worksheets' are to assist with calculation purposes only - this is not even submitted with your final tax return (as least was not include in my final Turbo Tax documents) So, you need not worry what is on the calculation worksheet so much, as long as the 8606 gets populated correctly.  Lines 8-12 on 8606 are also just there for calculation and do not need to be populated assuming the other lines above are correct as well. 

[hkTor22]

Thanks - Looks like this helped. The steps in "https://thefinancebuff.com/how-to-report-backdoor-roth-in-turbotax.html" - where it talks about - ".. I did a combination of rolling over, converting.." was the key. I am going to review further over the week and see if I see any other issues. But thanks a lot.

[hkTor22]

Just want to add that:

In the form #8606 - line #8 - "Enter the net amount you converted from traditional, SEP, and SIMPLE IRAs to Roth IRAs in 2021. Also, enter this amount on line 16" ==> This is still zero. 

The other lines in form 8606 - 1, 3, 5, 13, 16 & 17 - all has $6000 populated.

[DanaB27]

Yes, if TurboTax is using the Taxable IRA Distribution Worksheet to do the calculation then lines 6-12 will be blank.

It seems you entered the nondeductible contribution and conversion correctly since the the lines 1, 3, 5, 13, 16 & 17 in Form 8606 all have $6,000 populated.

@hkTor22

[Anonymous]

OMG! Thanks for this! Like an idiot, I've spent the better part of the past two days retreading everything over and over and over and over again... because I couldn't get a freaking number to appear on line 8. I kept thinking I had done something wrong. I kept wishing I could just update Form 8606 myself! I knew what I wanted to do, but Turbotax didn't appear to be cooperating. Ugh!!!

[JTM1121]

@bfetzer81 

A year later, I am now in a similar situation you were in back in 2021 doing your 2020 taxes but I'm not entirely sure how to handle the contribution to the Traditional IRA absent the conversion.  Do you simply just report the contribution to the Traditional IRA and report nothing related to the conversion until the following year?

[DanaB27]

Yes, you will enter your nondeductible traditional IRA contribution on your 2022 tax return and TurboTax will create the 2022 Form 8606 with a basis on line 14. This basis will be entered next year on your 2023 tax return when you report the conversion you made in 2023.

On your 2022 tax return

To enter the nondeductible contribution to the traditional IRA:

1. Login to your TurboTax Account 
2. Click on "Search" on the top right and type “IRA contributions” 
3. Click on “Jump to IRA contributions"
4. Select “traditional IRA”
5. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
6. Enter the amount you contributed
7. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
8. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contribution before this tax year.
9. Enter your basis in the Traditional IRA from your 2021 Form 8606 line 14 (if you had a basis in the prior year)
10. 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).

Next year on your 2023 tax return

To enter the Form 1099-R conversion: 

1. Click on "Search" on the top right and type “1099-R”  
2. Click on “Jump to 1099-R”
3. Click "Continue" and enter the information from your 1099-R
4. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
5. On the "Review your 1099-R info" screen click "Continue"
6. Answer "yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
7. Answer the questions about the basis from line 14 of your 2022 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

@JTM1121