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Nondeductible Trad IRA to Roth backdoor

SlosbergTax
Level 1

I tried to get this answer earlier... I don't know what my 8606 is supposed to look like if my married couple both have a 100,000 basis in their roth IRA... and both contribute in March of 2021 to a nondeductible IRA solely for the purpose of backdooring the Roth, which they've done.   At present I have entered 7000 for both of them as a contribution on screen 24 to a trad IRA.  Naturally, because of their very high income, its nondeductible.  They have each converted their 7000 trad IRA contributions to a Roth... all of this is being done in March 2021, for their 2020 tax returns.   Do I need to make sure that Lines 4 and 8 populate with the number 7000 for each of them on their 8606?  If so, how do I accomplish that?  Please tell me, what should the 8606 say?

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7 Replies 7
qbteachmt
Level 15

"I tried to get this answer earlier."

Yes, we've been working on it, here:

https://proconnect.intuit.com/community/lacerte-tax-discussions/discussion/backdoor-roth/00/143990

You just asked the very same people that you already asked. This is not Customer Support or Tech Support. No one is just standing by to take your call; your peers are also working today. Volunteering to be helpful here means taking away from other work. And that means other work takes away from trying to be helpful here.

Their Roth Basis has no impact on what you asked. On you other topic, it's been noted there is nothing special about this. you have a nondeductible contributions and a conversion, which happens to be nontaxable because there are no earnings.

Here are the IRS links to the instructions and the Form:

https://www.irs.gov/pub/irs-pdf/i8606.pdf

https://www.irs.gov/pub/irs-prior/f8606--2020.pdf

Your input screens should carry over to the forms, so make sure you have T and S, of course.

 

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"Level Up" is a gaming function, not a real life function.
SlosbergTax
Level 1

I'm sorry... Just trying to find the right answer.  Thank you for your time.  I appreciate your effort... 

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George4Tacks
Level 15

@SlosbergTax For Lacerte you need two things and I think they are both covered here

https://proconnect.intuit.com/community/retirement-tax-credits-and-deductions/help/entering-a-basis-...

 


ex-AllStar
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rbynaker
Level 11

Contributions can happen retroactively, conversions cannot.

For 2020 you have non-deductible IRA contributions reported on Forms 8606 (one for TP, one for SP).  For 2021 you'll have a 1099-R to report as a Roth IRA conversion.  For now your 8606 forms will "end" with $7,000 of basis.  Next year that basis carries forward and will get applied to the distribution, making it non-taxable (again, on the Form 8606 but in a different section).

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SlosbergTax
Level 1

Thank you for this helpful response.  I'm a lawyer, but strangely... I do not like arguing.  I just want to do the right thing.  Your response makes clear that there is nothing for me to do but enter the IRA contributions on screen 24 and handle the ROTH conversion on the 2021 tax return.  The Roth gets no mention on the 2020 return.  Thank you!

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George4Tacks
Level 15

I had not noticed your earlier questions on this same topic. I believe some of the difficulties here are the way the forum works and the fact that all roads seem to lead here leaving a perception that you would be talking with an Intuit Employee. That is not the case 99.9% of the answers here are from other users trying to help. Sometimes the original question is not complete formed in the original post and that can lead to what could seem to be confrontive. You need to try to keep everything in the first post by enlarging the explanation there to HOPEFULLY resolve your question.

I believe you now have all the right ammunition to do the return(s) correctly. 

Here is wising you MANY HAPPY RETURNS!


ex-AllStar
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qbteachmt
Level 15

For reference, that's the same link already provided, which applies along with the Conversion link from the first topic.

In other words, now the volunteers didn't see what has already been covered and everyone started from scratch, again. That's why we try to reduce the redundancy.

There is no arguing; the resources are the same and contain the references asked for. And that's not always true, but it is, in this case.

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"Level Up" is a gaming function, not a real life function.
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