Non-Deductible Basis Form 8606 Reduced by Roth Conversion?

[JessicaK1]

Since 2017 I have contributed the maximum IRA amount and immediately converted to Roth (in 2017 I made two contribution, one for 2016 and one for 2017).  All contributions have been non-deductible and I have zero balances in any traditional IRA, SEP, or SIMPLE plan.  Does the roth conversion reduce the non-deductible basis on form 8606 or should all the contributions (even though they have been converted to roth) be included in the basis?

I believe my form 8606 had indicated zero on line 2 for a couple years and then all of a sudden it began showing a cumulative amount. I'm just trying to figure out what is right and how to correct it.

My non-deductible contributions are as follows:

2016- 5500 (immediately fully converted to roth)

2017- 5500 (immediately fully converted to roth)

2018- 5500 (immediately fully converted to roth)

2019-6000 (immediately fully converted to roth)

2020-6000 (immediately fully converted to roth)

2021- 6000 (immediately fully converted to roth)

should my current nondeductible basis be $0 or 34,500

Thanks in advance for any insight you can provide!

[JohnB5677 · Accepted solution]

Based on what you've shown it should be "$0".  You should not have been taxed again when you converted to the ROTH, and since you converted all of it every year it should be depleted.

[JessicaK1]

Thanks so much for the information! To resolve on my current form 8606, should I just update the amount shown in turbo-tax and indicate the basis amount was incorrect for the prior year?

[DanaB27]

No, if your Form 8606 isn't correct then you will have to file a correct Form 8606 for prior years.  If you didn't have any earnings when you converted the funds and it will not affect the rest of the tax return then you are able to only file Form 8606 to correct each year. Please see Form 8606 and Instructions.

"If you aren’t required to file an income tax return but are required to file Form 8606, sign Form 8606 and send it to the IRS at the same time and place you would otherwise file Form 1040, 1040-SR, or 1040-NR. Be sure to include your address on page 1 of the form and your signature and the date on page 2 of the form." (IRS)

Please be aware, if you make a contribution in 2017 for 2016 and 2017 and then convert the amount in 2017 then your Form 8606 will have an amount of $5,500 in line 2 because you have the basis from the 2016 contribution.

[Tauepsilon1920]

Hi,

Just to make sure I'm understanding this correctly:

I have a Traditional IRA account with no balance in it at all.  If I make non-deductible contribution for year X in year X and immediately converting the full amount to my ROTH account during year X, leaving zero balance in the Traditional IRA account again, then when I file my Form 8606 every year during tax time, Line 2 (total basis in traditional IRAs) and Line 14 (total basis in traditional IRAs for year X and earlier years) should always be zero.  Right?

thank you so much.

[RobertB4444]

That is correct.

@Tauepsilon1920