Question

Back door IRA help!

Forum|Forum|5 years ago
April 22, 2021
2 replies
0 views

As a beginner, I made a mistake from the very beginning. And it tends to mess up my tax return for 2020. Need your experts' kind help here!

In 2019, I made 2* $6000 contribution to a traditional IRA by mistake on 12/24 and 12/26, respectively. After I realized it, I requested to withdraw the excess amount of contribution which was $6000.

In 2020, Jan 2rd, the withdraw was successful. So I made 2020 traditional IRA contribution of $6000 and convert the total $12000 to a roth IRA.

Then I got two 1099-R froms for 2020, one form has $6000 in box1, $0 in box 2a, unchecked in box2b, code P1 in box 7 and IRA/SEP/SIMPLE box checked. The other has $12000 in box1, $12000 in box 2a, checked in box2b, code 2 in box 7 and IRA/SEP/SIMPLE box checked.

When I input the first 1099-R form, there is no tax penalty added, but when I input the second one, it adds up a few thousands which I know it is not correct. All the money I contributed to the traditional IRA is after-tax and I have never got any tax deduction from IRA, so why turbotax calculates so much extra tax for the second 1099-R?

I followed the step-by-step guidance from this thread: https://ttlc.intuit.com/community/entering-importing/help/how-do-i-enter-a-backdoor-roth-ira-conversion/00/25567, but it just added up the tax.

Please kindly help!!! Thanks very much!

(p.s. I'll never put myself to this hard situation, just doing the contribution/conversion for the same tax year.)

macuser_22

Employee

Did you report the 2019 contribution as non-deductible on yiur 2019 tax return with an attached 8606 form with the $6,000 on line 1?

If not, then yiu need to amend and enter the contribution in the IRA contribution interview and if you are eligible for a deduction the interview will ask if you want to make some or all non-deductible. Make it all non-deductible. That will produce the 2019 8606 with the $6,000 on line 1,3 and 14.

Enter the 2020 nondeductible contribution the same way.

Use that 2019 8606 line 14 when you enter the 2020 1099-R and are asked for your prior years non-deductible contributions.

Enter IRA contributions here:
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),
Retirement & Investments,
Traditional & Roth IRA contribution.

OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

C

crystalPPAuthor

Thanks! I did report 8606 for 2019 and it does show $6000 in line 1, 3, 14.

I did the same thing for the 2020 1099-R, still confused why this time it leads to tax penalties, although box 2b "taxable amount not determined" is checked.

macuser_22

Employee

Where do you see penalties? What is on the 1040 form line 4a and 4b?

What on on the 2020 8606 form line 3 and 15-18?

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**