Done a backdoor IRA conversion, but later on found out that I could deduct my Traditional IRA contribution.

[ckwangt]

Hi,

2019 is my first year contributed to IRA (so I don't have any Traditional IRA basis). I did a backdoor IRA conversion and convert my whole contribution from Trad. IRA to Roth-IRA. However now I found out that my estimation was incorrect and I can actually deduct all the 6000 Trad. IRA contribution.

So what should I do now? Could I still stick to the original backdoor conversion plan and claim all my contribution to Trad. IRA (which later on converted to Roth-IRA) as non-deductable? Or is there any better way to deal with this case?

Thanks!

[fanfare]

There's nothing you can do. With the new laws once you convert to a Roth it is irreversible.

[macuser_22]

If you already made the contribution  non-deductible on line 1 of a 8606 form and  did the conversion then it cannot be undone.     You could amend to claim the deduction and then pay the tax on the conversion but  there would not be any sense to do so (a lot of trouble to get a deduction that would be taken by the tax on the conversion - which is the whole point of a backdoor Roth - the non-deductible basis pays the tax on the conversion).

If you did NOT enter the contribution as non-deductible and do not have a 8606 line 1 amount then you did not do a backdoor Roth at all.   If the conversion was done in 2019 the  yiu should have a 1099-R for the conversion that will be taxable and the contribution should either be on the 8606 line 1 or a 1040 Schedule 1, line 19 ad a deductible contribution - if neither one then yiu failed to even enter the contribution and must amend to report it one way or the other.

[ckwangt]

Hi @macuser_22 , @fanfare ,

Thanks for the reply.

I haven't filed my 2019 text return yet (I've postponed it) and is preparing it now. And I'd happy to stick to my original plan (i.e. backdoor conversion). 

I did receive a 1099-R for the conversion and it says taxable amount (2a) is 6000 and both boxes on 2b (Taxable amount not determined & total distribution) were checked. So what I should do is just fill that amount to 8606 line 1 and leave the deductible amount (i.e. 1040 Schedule 1, line 19) blank, right?

Thanks 🙂

[macuser_22 · Accepted solution]

Right.  You get it on the 8606 line 1 by entering it in the IRA contribution interview and say you want it to be non-deductible.

Enter IRA contributions here:
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),
Retirement & Investments,
Traditional & Roth IRA contribution.

OR  Use the "Tools" menu  (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.