Correctly entering Traditional IRA Contributions made for previous year (and this year), with backdoor conversions for each

Question

Hi,

My spouse and I are married filed jointly. In 2021 we begun each making traditional IRA contributions, and then did the backdoor conversion to Roth IRA. However, during 2021 calendar year, we each did contributions for both previous year (2020) and current year (2021). I'm having trouble understanding if I entered correctly in Turbotax (download version).

My questions:

Given all of the information below, do I need to do any amending of 2020's return, or do I need to file anything additional for 2020?
Did I enter everything correctly for this years return, and do the forms look OK after going through questionaire?

Recap of situation:

Contributions:
- February 2021:
  - Me: 6K Traditional IRA contribution for previous year 2020, followed by backdoor conversion a few days later
  - Spouse: Same as me
- December 2021:
  - Me: 6K Traditional IRA contribution for current year 2021, followed by backdoor conversion a few days later
  - Spouse: Same as me
Tax forms / Previous Return
- 2020
  - Return: It looks like last year's return includes form 8606 (one for each of us), showing 6k each in line 1 and 14, so I'm guessing when filing our 2020 return we must've indicated we were planning contributions later on (subsequently in 2021), as we did not make contributions during 2020 calendar year.
  - Form 5498: ~ May 2021, we each received form 5498 for 2020 showing the 6k contribution made
- 2021:
  - 1099-R: As expected we both received 1099-Rs showing:
    - Line 1: 12k
    - 2a (taxable amount): 12k
    - Line 7: 2, with IRA/Sep/Simple checked
What I entered into Turbotax
- During the interviews, I imported each of our 1099-Rs as is
- When asked during interview (separately for each of us), I chose
  - When asked: "What did you do with the money." -> "Moved money to another retirement account" AND "I did a combination of rolling over converting, etc."
  - When asked If i made and tracked non-deductble contributions, I said YES, and entered 6k as this was the amount I saw in 2020s 8606 line 14.
  - When asked for Traditional IRA balance as of December 31, I chose 0 for both, as the money would've been converted to the Roth IRA by then.
What it shows for Income Summary (after entering all information)
- IRA Distributions - nontaxable: $24,000
- 1040: shows 24,000 on line 4a, with 4b 0
- Form 8606 (Same for each of us):
  - line 1 6,000
  - Line 2 6,000
  - Line 3 12,000

Thanks!

DanaB27 · Accepted Answer

You can see it on Form 8606, line 1 shows your basis from the 2021 contribution and line 2 shows your basis from the 2020 contribution (since you only had the basis from 2020 and no other year).

Please note, the conversion was a 2021 conversion since it happen in 2021.

FangxiaL · Answer

To answer your first question: you do not need to amend your 2020 tax return. As to your second question, I can only provide you with some instructions on how to properly enter Backdoor Roth IRA conversions.   Here is the proper way to enter Backdoor Roth IRA conversion:   Follow the two-step process to properly enter your backdoor Roth conversion:   Step 1: Enter the Non-deductible contribution to a Traditional IRA:     Open your return if it's not already open  Inside TurboTax, search for ira contributions and select the Jump to link in the search results  Select Traditional IRA on the Traditional IRA and Roth IRA screen and Continue  Answer No to Is this a Repayment of a Retirement Distribution?  On the Tell Us How Much You Contributed screen, enter the amount contributed and continue       Enter $6,000 for Your total 2021 traditional IRA contributions      Answer No on the Did You Change Your Mind? screen  Answer No on Any Excess IRA Contributions Before 2021?  Answer Yes, I made and tracked nondeductible contributions to my IRA, or No, I did not make and track nondeductible contributions to my IRA. If you don't have any other Traditional IRA accounts, you can answer Yes  Enter $6,000 for Total Basis as of December 31, 2020 on the next screen  Answer the questions on the following screens, until you reach Choose Not to Deduct IRA Contributions. Select Yes, make part of my IRA contribution nondeductible and enter $6,000 in the box.     Step 2: Enter the Conversion from a Traditional IRA to a Roth IRA      Inside TurboTax, search for 1099-r and select the Jump to link in the search results   Answer Yes to Did you get a 1099-R in 2021?, then Continue       If you land on Your 1099-R Entries screen, select Add Another 1099-R      Select how you want to enter your 1099-R (import or type it in yourself) and follow the instructions  Answer None of these apply when you reach the screen Do any of these situations apply to you?  Select I converted some or all of it to a Roth IRA on the Tell us if you moved the money through a rollover or conversion screen  Next, choose Yes, all of this money was converted to a Roth IRA  Continue answering questions until you come to the Your 1099-R Entries screen  To check the results of your backdoor Roth IRA conversion, see your Form 1040:   On the left side of your screen, select Tax Tools, then Tools  Under Tool Center, select View Tax Summary  On the left side of your screen, select Preview my 1040       Your backdoor Roth IRA amount should be listed on Form 1040, Line 4a  as IRA distributions    Taxable amount should be zero unless you had earnings between the time you contributed to your Traditional IRA and the time your converted it to Roth IRA, then the earnings would be taxable    Schedule 1, Line 20 IRA deduction, should be blank      Select Back on the left side of your screen to return to where you left off in TurboTax