Question

Roth Conversion: Tax Contributions TY19 & TY20, Converted in 20 - Cannot enter previously taxed amount

Forum|Forum|5 years ago
January 23, 2021
1 reply
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I searched and found the "How To" for the "backdoor Roth" and it did not seem to work for me. We deposited $6K + $6K for TY19 and TY20 last year. We later did a conversion to a Roth, before which the funds earned 81 cents. I am entering the information for the 1099R and it shows the full amount of 12,000.81 for both boxes 1 and 2a. Turbo Tax does not allow me to enter the "previously" taxed amount that during the interview, and when I go to the forms entering the amount does nothing. TurboTax is treating the full $12,000.81 as Taxable, when only $0.81 should be as I have already paid taxes on that 12,0000.

D

dmertz

Employee

The nondeductible traditional IRA contribution for 2019 was reportable on your 2019 tax return on Part I of 2019 Form 8606. The amount on line 14 of the 2019 Form 8606 carries forward to line 2 of your 2020 Form 8606.

The nondeductible traditional IRA contribution for 2020 is similarly reportable on your 2020 tax return. TurboTax will prepare 2020 Form 8606 combining the basis carried forward from your 2019 Form 8606 and the new nondeductible traditional IRA contribution for 2020 to be used in calculating the taxable amount of your Roth conversion.

The Roth conversion is entered into TurboTax by entering the Form 1099-R without modification. TurboTax will then calculate the taxable amount of the Roth conversion. Be sure to click the Continue button on the Your 1099-R Entries page to reach all of the questions that ask for information needed to complete Form 8606 to correctly calculate the taxable amount, which will be $0 (rounded) as long as you have no other money in traditional IRAs.