Question

What to enter for question: "Any Nondeductible Contributions to IRA?"

Forum|Forum|3 years ago
February 23, 2023
2 replies
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Hi all,

I do backdoor conversions every year from Traditional IRA to Roth IRA. In the beginning of year 2022 I had a balance in my traditional of $500 from year 2021. I also contributed $2920 in 2022 for year 2021. I then contributed $6000 for year 2022. All of this was converted in year 2022 for a total of $9420 which was reflected correctly on my 1099-R of conversions from Traditional to Roth.

Quick question. Under the portion of entering 1099-R there is a question "Any Nondeductible Contributions to IRA?" Do I simply enter line 14 from 8606 from tax year 2021? Or would this amount be $0 because everything is now $0 in my traditional at end of year 2022?

Also, when I enter my 1099-R for these conversions it adds a tax burden even though I shouldn't be paying any taxes on these. Will this amount change later in Turbotax when I fill out "Deductions and Credits?" Thank you

JohnB5677

Based on what you've said, you do not have any Nondeductible Contributions. You had $3420 for 2021 and $6,000 for 2022, both fall within the contribution limits. As a result, you reduced your income, or basically got a tax deduction for those contributions. So, when you convert it to a ROTH the IRS wants the tax that you didn't pay earlier, and in this case the entire distribution is taxable.

Based on what you've shared with us, you did not have "Any Nondeductible Contributions to IRA?"; therefore, that entry should be zero.

To address your final question. The full amount of your transition from a Traditional IRA to a ROTH is taxable. You will have taxes assessed on the ROTH contribution because of the issue stated above. However, the ROTH contribution and any growth will not be taxed again.

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D

dhuynh44Author

@JohnB5677

Thanks for the response. I’m a bit confused, or maybe I wasn’t clear on my text. I had contributed my AFTER tax dollars to the traditional IRA, then converted this amount to Roth. I thought doing this should not tax this amount so it was being converted? The TurboTax program says “Good news you don’t have to pay additional tax on this amount”. However when I input my 1009-R it adds a tax burden to my total. Would this amount decrease after I finish my “deductions and credits section”?

It wouldn’t make sense for me to pay taxes on my income, convert it to a Roth IRA but pay additional taxes on it?

Hence my question at the part “Any Nondeductible Contributions to IRA?” I did contribute $6000 for year 2022 but this was then all converted to Roth. From my previous 2021 on line 14 8606 I have the amount of $2722. When it asks “Any Nondeductible Contributions to IRA?” it mentions to enter the amount on line 14 from the most recent 8606.

Can someone please help clarify this for me? Thank you!

JohnB5677

I apparently did misinterpret your statement. There is no indication in the text that the contributions were Non-Deductible. If you don't have another retirement vehicle at work, the first $6,000 to your traditional IRA is deductible. However, if you're confident they were after tax dollars, you can claim them as “Any Nondeductible Contributions to IRA?”

Please be cautious and confirm that you did not get the tax deduction. If you've posted the traditional IRA to your 2022 tax return, please follow these steps to see your return.

On the menu bar on the left that shows.
1. My Info
2. Federal
3. State
4. Review
5. File
Select Tax Tools
On the drop-down select Tools
On the popup menu
Select View Tax Summary
On the left sidebar
Select Preview my 1040.

Line 31 of the 1040 would include the IRA contribution.
The contribution would be identified on Schedule 3 Line 4.
Schedule 3 is at the very end of the 1040 packet you are looking at.

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D

dmertz

Employee

"Do I simply enter line 14 from 8606 from tax year 2021?

Yes, that's your basis carried into 2022 from 2021 and is the amount that should already have been present for your basis in nondeductible traditional IRA contributions from prior years as a result of importing your 2021 TurboTax tax file into 2022 TurboTax.