Question

Funding 2020 and 2021 Backdoor Roth in March of 2021

Forum|Forum|4 years ago
March 25, 2022
1 reply
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Sorry if this has been brought up. I did a search and could not find the answer.

Last March, my wife and I fully funded backdoor Roth IRAs for 2020 and 2021. We did this after filing our 2020 taxes.

The 2021 1099 Rs for my wife and I are showing $12,000.01 each (not quite sure where the extra cent came from since we only sent $6000 for each of us for each year, but whatever). This makes sense since we each contributed $12000 during the 2021 tax year.

I guess my question is, how do I go about entering all this information into Turbotax?

I tried to get amended 1099Rs but the brokerage managing the money told me I was dumb (not in those words, but essentially that is how I felt) because the 1099 R reflects transactions in a given year.

Research has led me to a few possibilities, but I don't have a concrete answer, so I figured I would ask the ninjas here.

My original thought is to keep the numbers the way they are (enter the $24000 and show the conversion). Turbotax warns me that this will lead to penalties for depositing to much money in the tax year. However, the brokerage knows the money was distributed for 2020 and 2021, so I think I should be good.

Another option I contemplated was to go back and do my 2020 Turbotax (obviously very reliant on the software here) and produce form 8606 for my wife and I. Then mail it in to my local IRS office (it is my understanding we do not have to amend for this). Then when I file this year, do the other half ($6000 for each of us). My concern is that these numbers will not match my 1099R.

Any thoughts would be greatly appreciated!

G

GeorgeM777

Choose your last option about filing a 2020 Form 8606, and any other required form for 2020, to reflect that you had contributed to a back-door Roth. Your brokerage firm was probably reluctant to issue amended 1099-Rs given that the Roth contributions were both made during the same calendar year. In other words, they were not concerned with the specific tax years at issue.

Your 2021 return should reflect only one back-door Roth contribution, namely the contribution you, and your spouse, designated as a 2021 contribution (which it appears you effected in calendar year 2021). Your 2020 tax return should reflect the back-door Roth contribution you effected during calendar year 2021 but designated it as a contribution for tax year 2020.

If you used TurboTax online in 2020, you can amend your return by logging into your account, and from the Tax Home page, scroll down the page to Your tax returns & documents. Select 2020, then select Amend (change) 2020 return. Respond accordingly to the questions as they appear.

@Richmond68

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