Question

Form 8606 Part II, line 17 has $5,500 filled in from part I, but the roth ira limit for 2019 is $6,000. This seems like an error and results in $500 liability, is it not?

Forum|Forum|6 years ago
March 8, 2020
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TurboTax Premier Online

Employee

You question seems to imply that you converted $6,000 and the nontaxable amount of the conversion was only $5,500. That's entirely possible depending on how much you entered as a nondeductible traditional IRA contribution for 2019, the amount you entered or confirmed as your basis in nondeductible contributions carried into 2019 (from line 14 of your most recently filed Form 8606 for a prior year), and the total value in your traditional IRAs on December 31, 2019.

A result of exactly $5,500 nontaxable on Form 8606 line 11 and therefore on line 17 suggests that you have not entered any nondeductible traditional IRA contribution for 2019 (Form 8606 line 1 is blank), that Form 8606 line 2 shows $5,500 of basis carried into 2019, that you had no money in any traditional IRAs on December 31, 2019 and that you entered a Roth conversion of $6,000. Perhaps your traditional IRA contribution for 2019 was deductible and you are getting the reduction in your tax liability on Schedule 1 line 19.

It does seem odd though, that you would have had converted only $6,000 in 2019 if you had basis in nondeductible traditional IRA contributions of $5,500 carried into 2019 (implying that you should have had more than $6,000 in your traditional IRAs in 2019), so perhaps you made a mistake on your 2018 tax return as well as on your 2019 tax return and you actually has $0 of basis carried into 2019. Did you make any traditional IRA contributions for 2018 that you converted to Roth? If so, in when did you perform those transactions? Do you have a 2018 Form 8606?

D

DianeC958

No, the form 8606 only shows that amount on Line 17 that you qualify for to contribute.

If your income is too high then your contribution is limited.

If you are Married Filing Joint and your income is less that $193,000 the you are allowed to contribute the full $6000 if your income is between $193,000 to $203,000 then your contribution is limited and above the $203,000 you may not make a contribution to a Roth IRA directly.

If you are Single and your income is less than $122,000 you are allowed to contribute the full $6,000 if your income is between $122,000 to $137,000 your contribution is limited and above $137,000 you may not make a contribution to a Roth IRA directly.

Another option if you want to contribute the full $6,000 is for you to do a Back Door Roth IRA.

First you contribute to a Traditional IRA account and then you convert to a Roth IRA account, by doing the contributions this way you by pass the income limits and can contribute the full amount no matter how high your income is.

Amount of Roth IRA Contributions That You Can Make For 2019

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K

kah237Author

"Another option if you want to contribute the full $6,000 is for you to do a Back Door Roth IRA.

First you contribute to a Traditional IRA account and then you convert to a Roth IRA account, by doing the contributions this way you by pass the income limits and can contribute the full amount no matter how high your income is."

Yes this is what we did in 2019: contributed $6000 to traditional and converted to roth. We did this all through Vanguard and imported our account to TurboTax. I see form 8606 part II "2019 Conversions From Traditional to Roth IRAs" is filled out for us after the import, but line 16 is $6000, line 17 is $5500, so line 18 shows a taxable amount of $500. I would think line 17 should be $6000. It looks like maybe the error is on the previous Part I "Nondeductible Contributions to Traditional IRAs". In this part, line 1 shows a contribution of $5500 but we contributed $6000 to the traditional IRA before converting. Could this be the source of the error?

D

dmertz

Employee

Check line 1 of the Form 5329. Perhaps you told TurboTax that you made only a $5,500 traditional IRA contribution for 2019. Otherwise, perhaps you did not tell TurboTax about any nondeductible traditional IRA contribution made for 2019 and the $5,500 is a carryforward to line 2 of your 2019 Form 5329 from line 14 of your 2018 Form 8606.