8606 Not zeroing out IRA Basis

[user17566711928]

Hi - 

Each year I contribute after tax dollars to an IRA and then immediately rollover to a Roth.   I always do this in the same calendar year.   Each year I file an 8606 and Turbotax shows the contribution as well as the rollover.

In 2023 apparently it did not deduct the Rollover amount, so as I'm working on my 2024 return it shows a $6,500 basis.    It's doing the same error for 2024 and now my basis at year-end is $13,500 ($6,500 + $7,000) - it should be zero.

I tried deleted both the 1099-R as well as the 8606 and repeating it, but have the same thing.

Did something change in 2023 tax year?   Based on the instructions on 8606 it looks like my basis should be 0 at the end of the year (the way it's been for over a decade).

[dmertz]

Nothing changed.  I assume that you have no other funds in traditional IRAs.  It seems that you are reporting a rollover, not a Roth conversion.  Make sure that you are indicating that you moved the money to another retirement account and, if not offered the opportunity to explicitly indicate that you moved the money to a Roth account, that you indicate that you did a combination of rolling over, converting and cashing out, then indicate the amount converted to Roth.

[user17566711928]

Thanks.   This was the fix.    Have to select “did a combination” and then enter in the full amount in the Roth column

[dmertz]

You'll need to amend your 2023 tax return to make the correction on that tax return and you'll need to zero out the $6,500  of basis carried over to your 2024 tax return.

TurboTax used to have a selection to explicitly indicate a Roth conversion, but they eliminated that (at least in the desktop version) more than a few years ago, now requiring the slightly convoluted way of indicating a Roth conversion.

[user17566711928]

Amending my PY return seems a bit of overkill.    I think I’m just going to zero out the carryover for 2024’s 8606

[dmertz]

Keep in mind that even though the taxable result is unchanged, your original 2023 tax return included a Form 5329 with errors on both Part I and Part II as well as an erroneous ROLLOVER notation next to Form 1040 line 4b.