Traditional IRA Basis Tracking

[Joe11235]

Hello,

Having trouble with traditional IRA basis tracking in turbo tax.  Not entirely sure how to clean this up.

2022 - 8606

Summary - Contributed 6k nondeductible.  No Roth conversion during 2022

• Line 1 - 6000
• Contributed 6000 for 2022
• Line 3 - 6000
• Line 14 - 6000
• No roth conversion during 2022 - so 6k basis

2023 - 8606

Summary - Contributed 6500 nondeductible.  Converted entire balance (12500+interest) to Roth.

• Line 1 - 6500
• Contributed 6500 for 2023
• Line 2 - 0
• Seems like this should be 6k to represent 2022 basis?
• Line 3 - 6500
• Seems like this should be 12500
• Line 14 - 6500
• Seems like I should have a 0 basis?

2024 - 8606

Summary - Contributed 7000 nondeductible.  Converted the entire balance (7000+interest) to Roth.

• Line 1 - 7000
• Contributed 7k for 2024
• Line 2 - 6500
• I think I should be at a 0 basis.
• Line 3 - 13500
• Line 5 - 13500
• Not sure why this has a value
• Line 13 - 7004
• Line 14 - 6496
• Line 16 - 7004
• Line 17 - 7004

Questions

1. Is my understanding correct?
2. I can't seem to get turbo tax to recognize a 0 basis on Line 14 (2023)
3. Should I input 0 basis on Line 2 (2024) to correct this?

[baldietax]

yes looks like things went wrong in 2023 when it didn't carry over your basis from 2022.  But also the calculations for the Roth conversion in 2023 look off which is why you can't get Line 14 to zero; if it had the wrong basis to begin with then you would have also been taxed on the Roth conversion as it thought you only had a 6500 basis on a 12500+INT conversion.  What's on the other lines 6-13 for the 8606 in 2023?

For 2024, there should be an interview question where you provide the basis for line 2, it will default to the 2023 value if you did a carry over of the 2023 return but you should be able to edit it.  If you go back thru the questions under Deductions & Credits for Non-deductible IRA there's a question "yes I made and tracked nondeductible contributions to my IRA" and then "lets find your IRA Basis" and you should be able to update the amount there.  Did you go through that or is not working?

without the right basis, the calculations on the Roth conversion for 2024 will be wrong (same for 2023).  Line 5 seems ok to have the same (incorrect) value as Line, it's just Line 3 plus any contributions in Q1 2025.

Seems like you'll need to file amended return for 2023 with the revised 8606 once you get it fixed?

Not a CPA/Expert, just my 2 cents.

[baldietax]

btw, the response to this post had a recap of the steps to enter a backdoor Roth so you can check all the steps and inputs you need to hit

https://ttlc.intuit.com/community/taxes/discussion/turbotax-incorrectly-showing-penalty-for-my-backd...

also this article

https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-benefits/enter-backdoor-roth-...

[baldietax]

P.S. in the article above it refers to how to handle 8606 from prior year if not filed for a prior basis, not sure your situation but may not need to refile 2023 if there is no tax impact once it's sorted out.  Form 8606 instructions may have further guidance on how to handle updates to unfiled or previously filed 8606.  Outside my wheelhouse just wanted to draw your attention to that section in the help article.