Roth IRA conversion reporting - triggering taxable amount on deposit made with after tax money

[macuser_22]

Glad you solved it.

[psanand]

Hi MacUsr_22

I am not able to find/view the most recent post where I shared the updated form 8606-T to confirm if everything looks correct, so I am re-posting the same information again, to confirm:

Under "Deduction and Credit" under "Tell Us how much you contributed / Your total amount you put into traditional IRA for 2021, even if you later transferred some or all of it to a Roth IRA"

for question " Your Total 2021 traditional IRA contributions" I was earlier entering 14,000, which was my total DURING year 2021, but 7 K of that was for 2020 and 7K was for 2021). I corrected that now to make it 7K ONLY contribution made for year 2021. I think this fixed the issue/error.

Here are the details/re-posted here:

IRA Balances:

IRA Balance on 12/31/2020 = $0.40

IRA Bal as on 12/31/2021  = $ 0.49

IRA Deposits & Conversions:

For Year 2020:

Deposited in IRA on 1/4/2021 for year 2020 = 7K

Roth Conversion on 2/4/2021 for year 2020   = 7K

For Year 2021:

Deposited in IRA on 5/25/2021 for year 2021 = 7K

Roth Conversion on 6/8/2021 for year 2021   = 7K

For Year 2022:

Deposited in IRA on 2/4/2022 for year 2022 = 7K

Roth Conversion on 3/7/2022 for year 2022   = 7K

Revised/Updated form 8606 now looks as:

Line 1 = 7K

Line 2 = 7K

Line 3 = 14K

Line 4 = blank

Line 5 = 14K

Line 6, 7, 8, 9, 10, 11, 12  = blank

Line 13 = 14K with * Asterisk 

Line 14, 15a, 15b, 15c = 0. with line 15c has * Asterisk 

Line 18 = 0. with  * Asterisk 

Line 19 thru 25c = blank

I would appreciate it if you could check  and let me know, I have done it correctly, now?

[DanaB27]

Yes, you seemed to have corrected your error for the contribution in the Deductions & Credit section. Everything looks correct.

@psanand

[psanand]

Hi DanaB,

I just realized that I didn't include the amount in my earlier post for Form 8606-T for Line 16 & 17. These both lines have 14K each.

Here is the final picture:

Form 8606 now looks as:

Line 1 = 7K

Line 2 = 7K

Line 3 = 14K

Line 4 = blank

Line 5 = 14K

Line 6, 7, 8, 9, 10, 11, 12  = blank

Line 13 = 14K with * Asterisk 

Line 14, 15a, 15b, 15c = 0. with line 15c has * Asterisk 

Line 16= 14K

Line 17= 14K

Line 18 = 0. with  * Asterisk 

Line 19 thru 25c = blank

I would appreciate it if you could check  and let me know, with Line 16 & 17 having 14K, this is done correctly?

[psanand]

Apologies for confusion, I just re-visited the IRA & Roth IRA questions double checked and the Line 16 & Line 17 are also blank, NOT 14K. Not sure what happened, the form now looks as:

Here is the final picture:

Here are the details/re-posted here:

IRA Balances:

IRA Balance on 12/31/2020 = $0.40

IRA Bal as on 12/31/2021  = $ 0.49

IRA Deposits & Conversions:

For Year 2020:

Deposited in IRA on 1/4/2021 for year 2020 = 7K

Roth Conversion on 2/4/2021 for year 2020   = 7K

For Year 2021:

Deposited in IRA on 5/25/2021 for year 2021 = 7K

Roth Conversion on 6/8/2021 for year 2021   = 7K

For Year 2022:

Deposited in IRA on 2/4/2022 for year 2022 = 7K

Roth Conversion on 3/7/2022 for year 2022   = 7K

Form 8606 now looks as:

Line 1 = 7K

Line 2 = 7K

Line 3 = 14K

Line 4 = blank

Line 5 = 14K

Line 6, 7, 8, 9, 10, 11, 12  = blank

Line 13 = 14K with * Asterisk 

Line 14, 15a, 15b, 15c = 0. with line 15c has * Asterisk 

Line 16=  Blank

Line 17= Blank

Line 18 = 0. with  * Asterisk 

Line 19 thru 25c = blank

Please check and confirm. Thank you for your help!

[DanaB27]

It looks like you made a change during the retirement section interview, and it doesn’t show the conversion anymore. Please make sure you selected that you converted all of the distribution:

1. Click on "Search" on the top right and type “1099-R” 
2. Click on “Jump to 1099-R”
3. On the "Review your 1099-R info" screen click "edit"
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”

@psanand

[psanand]

Hi DanaB,

Thank you so much for catching my error and suggested fix:

I revisited the 1099-R section and here is what I have in form 8606-T now:

Form 8606 now looks as:

Line 1 = 7K

Line 2 = 7K

Line 3 = 14K

Line 4 = blank

Line 5 = 14K

Line 6, 7, 8, 9, 10, 11, 12  = blank

Line 13 = 14K with * Asterisk 

Line 14, 15a, 15b, 15c = 0. with line 15c has * Asterisk 

Line 16= 14K

Line 17= 14K

Line 18 = 0. with  * Asterisk 

Line 19 thru 25c = blank.

Please confirm this looks correct now?

Another question regarding IRA to Roth IRA conversion:

On Screen "Lat's find your IRA Basis", for entry "We have transferred the total basis for your Traditional IRAs for all years through 2020. Correct the Amount below if needed" / "total basis as of December 2020 = 7,000".

Question is:
Should this be 14,000.00 to include 2019 7K conversion done in 2020 (deposited to IRA on 1/27/2020 & Converted to Roth IRA on 3/2/2020) but was not reported initially on 2019 Tax return and  had filed amended return with form 8606-T on 3/27/2021.

Please let me know, if it should be 14,000 or 7K or different values based on:

IRA Deposits & Conversions:

For Year 2019:

Deposited in IRA on 1/27/2020 for year 2019 = 7K

Roth Conversion on 3/2/2020 for year 2019   = 7K

For Year 2020:

Deposited in IRA on 1/4/2021 for year 2020 = 7K

Roth Conversion on 2/4/2021 for year 2020   = 7K

For Year 2021:

Deposited in IRA on 5/25/2021 for year 2021 = 7K

Roth Conversion on 6/8/2021 for year 2021   = 7K

For Year 2022:

Deposited in IRA on 2/4/2022 for year 2022 = 7K

Roth Conversion on 3/7/2022 for year 2022   = 7K

"IRA Information Worksheet has:

Part-1 Basis & Value - 1 =7K, 23,4,5 are blank

Part-2 Roth IRA - 6-Basis in Roth IRA contribution - balnk / 7-Basis in Roth IRA conversions -28K / 9- Conversion Basis Carryover as of 12/31/2021=28K

Part-3 Traditional IRA Basis Details - 12-Basis for 2020 and earlier years - 7K / 17-Adjusted total basis in Traditional IRAs - 7K

Part-4 Traditional IRA year-end Value - Lines 18 thru 21 - all zeros

Part-5 Roth IRA conversions and contribution balances / Line 23-29 all Zero / Line-30- (2019 Conversion Cont. NOT taxable Conv)=7K  / Line-31=0 / Line-32 (2020 Conversion Cont. NOT taxable Conv)=7K

2021 Transactions - Contributions - ONLY Line 36 (Conversion Cont. NOT taxable Conv)  = 14K rest all are Zero

Balance Carryover to 2022 (Basis After 2021 transactions):

Line-56 (2019 Conversion Cont. NOT taxable Conv)= 7K

Line-58 (2020 Conversion Cont. NOT taxable Conv)= 7K

Line-60 ((2021 Conversion Cont. NOT taxable Conv)= 14K)

Apologies for long messages, I just wanted to get this checked/corrected if needed to avoid any confusion in Future. Please review Thank you for your help and getting this IRA/Roth IRA basis corrected for Future calculations.

[DanaB27]

Yes, the Form 8606 entries look correct.

The "total basis as of December 2020” should be $7,000.

@psanand

[psanand]

Thank you DanaB for your help!