Backdoor Roth IRA with contributions for 2019 & 2020 made in 2020

[silviosangineto]

I believe I don't owe any taxes. How can I handle this?

This is the situation:

Not-deductible (post-tax) contribution to traditional IRA, this is the breakdown of my contributions:

• 01/06/2020 - 6K contribution to traditional IRA (this is for the year 2019)
• 01/07/2020 - 6K contribution to traditional IRA (this is for the year 2020)

After the contributions, I have converted the full amount (12,000$) to a Roth-IRA. This is the breakdown of the conversions:

• 01/07/2020 - 6K conversion to ROTH-IRA (this is for the year 2019)
• 01/08/2020 - 6K conversion to ROTH-IRA (this is for the year 2020)

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I've followed the following instructions: https://ttlc.intuit.com/community/entering-importing/help/how-do-i-enter-a-backdoor-roth-ira-convers... but 6,000$ of the 12,000$ are considered mistakenly taxable. 

I've tried to contact two times a live expert without success. They were not able either to solve the issue or clarifying the situation because in their opinion the amount was taxable.  

[DanaB27]

Please follow these steps enter a "Backdoor IRA" to ensure it is calculated correctly in TurboTax (pay close attention to enter your prior year basis steps 8 and 9:(

To enter the nondeductible contribution to the traditional IRA:

1. Login to your TurboTax Account 
2. Click on the Search box on the top 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: $6,000
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 contributions before this tax year.
9. If you had a basis in the Traditional IRA before then enter the amount: $6,000 from 2019.
10. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount: $6,000.

To enter the 1099-R distribution/conversion: 

1. Login to your TurboTax Account 
2. Click on the Search box on the top and type “1099-R”
3. Click on “Jump to 1099-R”
4. Click "Continue" and enter the information from your 1099-R
5. 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”
6. On the "Your 1099-R Entries" screen click "continue"
7. Answer "yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
8. Answer the questions about the basis ($6,000 from 2019).

Please double-check that you had enter your 2019 contribution as nondeductible on your 2019 tax return and it created Form 8606. 

Please What is IRS Form 8606: Nondeductible IRAs for additional information.

[silviosangineto]

The challenge is that your instructions are not what I see on my screen and here all the details below. What am I missing?

To enter the nondeductible contribution to the traditional IRA:

(the other steps are the same)

From Step 6:

Step 7:

Step 8:

Step 9:

Step 10:

Here I made the change you are suggesting. If I see the tax return from 2019 the basis was 0 because clearly that amount has been transferred in 2020 when I have contributed to it. (During my tax return in April 2020 I didn't have any 1099-R). Is still right to put 6K?

Step 11:

Step 12

Step 13

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To enter the 1099-R distribution/conversion: 

Step 7

Step 8

My tax return 2019

FORM 1040 4a 4b

FORM 8606

Again, I have contributed to my IRA in January 2020 for 2019, that's why I didn't have any money in Dec 2019.

[DanaB27]

It looks like you entered everything correctly. The $12,000 won't be taxable and will not show on line 4b. Please check line 4a and 4b of your Form 1040:

1. Click on "Tax Tools" in the left menu
2. Click "Tools"
3. Click "View Tax Summary" in the Tool Center window
4. Click on "Preview my 1040" on the left

You won't get step 10 from the contribution because TurboTax makes it nondeductible because your AGI is too high.