[Editor's Note: Many high-income professional investors first learned about the Backdoor Roth IRA on this site. One of my most popular posts is the tutorial on the process. In the lengthy comments section of that post, many people asked how to handle a Backdoor Roth IRA (especially form 8606) if you contributed in the next calendar year. While it is “cleaner” to make your contribution and your conversion all in the same calendar tax year, you can make your contribution up until your tax filing date of the next year. I was going to write a post on the subject and then, lo and behold, a guest post on the subject showed up in my email box. The writer wanted to stay anonymous and we have no financial relationship.]
Maybe you are a new reader and just saw the light this January. Maybe you were reading up on the Backdoor Roth and December 31 flew by you. Maybe you are new to financial planning and weren’t sure if you’d have enough money to make the $6k contribution this year (Not very WCI of you! See, that’s where the planning portion kicks in). Or maybe you were waiting to see if you could afford your new boat and still have enough left over from your bonus to make the Backdoor Roth happen (please, please don’t let this be the reason — and if it is, for Pete’s sake, don’t admit it here!).
Whatever the reason, you have found yourself ready to do a Backdoor Roth for the previous year. You’re wondering if you can make a non-deductible contribution in 2015 to your 2014 traditional IRA and still get in the back door. If so, how do you do this?
How to Fill Out Form 8606 for Backdoor Roth Late Contributions
Great question. If you’re like me, you re-read the posts on Backdoor Roths here a million times trying to find the answer. You scour other websites but find yourself back here. You locate WCI’s generous image postings of how to fill out Form 8606 but can’t find an example of a procrastinator such as yourself who is contributing late. So instead, you head over to the IRS website, pull down the Form 8606 yourself, and try to make heads or tails of what seems like a foreign language, realizing of course that you are not a CPA but just a DIYer (that is my caveat emptor, by the way).
Below, you will see a Form 8606 filled out with 2014 values in the appropriate boxes, and the numbers for your 2015 Form 8606 in the margin on the right. Don’t worry, I’ll step you through it. Please note that this setup shows a conversion when there have been no gains in the prior year contributions so that there are no taxes due on gains.
Line 3 is your total tIRA contributions, including previous and current year. For 2014, that would be only the $5500. For 2015, that would be the $5500 for last year and the $5500 for this year. For the 2014 year, the answer to the Question in Line 3 is NO, so you enter the amount from Line 3 into Line 14 and skip the rest of Part 1. For your 2015 taxes, Line 4 represents the late contributions you made in 2016 to your 2015 tIRA ($0 since you were diligent this year) and Line 5 represents the late contributions you made in 2014.
Line 6 is the total value of your tIRA on December 31st, this is the information that will affect the pro rata rules. Since you have no previous non-deductible contributions because you have been a good little WCI minion and cleared out previous IRA accounts, this will be $0 as well.
Line 8 you skipped for 2014 because you answered NO to Line 3. In 2015, you will be converting the full amount in your tIRA to a Roth.
Line 11 is the non-taxable portion of your conversion — which, if you’ve done things right, should be the full amount you are converting — $11,000.
Line 14 is the basis in your tIRA for the current year and prior — which should now be $0 in 2015 because you just converted all of it to a Roth (remember, previously it was $5500 for the contribution year 2014 before you converted.)
Line 16 is the amount you converted to Roth. For 2014, that is $0, for 2015 that should be the full $11,000. Line 17 is the non-taxable portion that you converted. This should be $0 for 2014 and $11,000 for 2015. Line 18 is the taxable portion of your conversion. This should be $0 for both years since you did not do any conversion for 2014 and you converted only non-taxable (i.e. already taxed) portions of the tIRA for 2015. [Editor's Note: Whether you're doing your own taxes or paying someone else to prepare them, be extra sure to check that line and make sure it is zero. Many doctors have accidentally paid taxes twice on their Backdoor Roth IRA money.]
Looking Ahead
That should be it, you’re done! Now make sure to make your contributions in the future during the year for which you are contributing — remember, it’s time IN the market that counts, not timing the market!
What do you think? Any questions? Are you doing a Backdoor Roth IRA? If not, why not? Is there anything we can do here at WCI to make it easier for you? Comment below!
Dear WCI,
This is my very first comment on your site. I found your book (recommended by an anesthesiologist at my hospital) very useful. Your website continues to be a source of further knowledge.
I was wondering if you could give me some advice. I converted my wife’s tIRA at Fidelity to a Roth in 2015 (she had that for a few years). Following that, I opened tIRA for both myself and her at Vanguard, contributed to both for 2014, and the next day, I converted both to Roth. My question is this: Do I report those 3 conversions on 2014 tax return, or next year on my 2015 return?
Thanks so much!
conversions done in 2015 are reported on your 2015 return. Conversions done in 2014 are reported on your 2014 return. Contributions for the 2014 year are reported on your 2014 return. Likewise for 2015.
So I was mostly glad to see my accountant filled out my 8606 exactly as above with a caveat. He put 0 in line 23, 11,000 in line 24 and 0 in line 25. I’m confused is this wrong, does it even matter as 25 is still 0. (also 19-22 are 0). I did not take any distributions.
I’m amazed at how many accountants screw this form up. Why did he even fill out Section III? Did you take a Roth IRA distribution?
No distribution. Line 21 even says stop if amount is 0. Line 24 seems like it could be your conversions amount. It seems like a non issue because the tax is 0, should I have them change it. Will it affect next years numbers? I had my taxes extended so I have time to fix it if need be?
Read the instruction line for part III:
“Complete this part only if you took a distribution…”
You should never get to line 19, much less line 21.
I just realized that I have an old 401k with a previous employer, left behind, doing pretty well. Do I have to “hide” the money in it into my current (active) 401k at work, or is it fine to leave it there? I moved all my earnings from IRAs into my 401k at work.
Thanks!
It’s fine to leave it there if you want. YOu may want to simplify things by rolling it into your employer 401(k) or individual 401(k).
Hi WCI,
My wife (a current fellow in training with resident’s salary) and I (an attending) are trying to figure out how to go about doing a roth IRA for her. We married this year, so unsure if we will be filing taxes jointly or separately. If we file jointly (which I assume we will) my understanding is that we could just do the backdoor conversion since our combined income will be above the contribution limit. Is that correct? But if we end up filing separately this year, then she be able to contribute directly to a roth IRA?
Thanks,
Greg
MFS is not the same as filing as a single person. I’d have to dig deeper to see if she is eligible or not, but on a practical basis, it isn’t worth it.
I agree you’ll probably want to do MFJ, so do it through the backdoor. Anyone can do it through the backdoor, even if you’re below the limit.
Thanks!
Hi WCI,
Thanks for the valuable information on this site. A couple question to ensure that I’m clear.
a) Is there any downside to doing a Backdoor Roth IRA? If I’m not sure which income bracket I’ll be in during 2016, would it be okay for me to just proceed with this option and contribute to my Traditional IRA?
b) I had originally contributed in 2015 to a Roth IRA, but due to my income, later re-characterized it to a non-deductible Traditional IRA. Would I be able to make my 2016 contribution to my Traditional IRA, and then rollover the entire amount to a Roth IRA? This would make my basis $11k with minimal taxes on the associated capital gains. Is this thinking correct?
Happy New Year!
a) Not really.
b) Yes. Yes.
I’m very confused here… I have question about backdoor Roth. I currently have a traditional IRA and a Roth IRA. I’d like to do a backdoor Roth but I’d like to avoid any taxes regarding the pro-rata rule. I’ve just recently contributed $5500 to my tIRA this year. I did find that my current employer allows roll-in to my 401k.
My concern is whether I botched being able to do the backdoor Roth this year by doing my $5500 contribution this year instead of waiting to roll-in my tIRA to my 401k?
Also after I’ve rolled in my tIRA to my 401k, can I later roll that into a Roth IRA and if so how soon after the roll-in can I do that?
Is there anything bad about just biting the bullet forgetting all of this converting my tIRA to a Roth IRA and paying whatever necessary taxes?
Thanks!
It’s going to get ugly but you may still be able to salvage this. If you are using the same IRA for your tax-deferred money and your non-deductible money, you either need to convert the whole thing (perhaps the best option if the tax bill isn’t too high) or look into isolating your basis by rolling just the tax-deferred money into your 401(k). If your 401(k) accepts after-tax money as a rollover, you’re going to be out of luck there, but it probably doesn’t. There’s no time period to wait if this does occur.
Thank you so much for sharing an 8606 form for 2 different years. Can you please share a similar that has already paid prorata tax on the growth component in 2014 tax filing and has another $5500 for 2015 contribution with no growth outside of Backdoor Roth IRA account?
Thank you.
I would suggest reading the instructions for the 8606 found here. They’re fairly easy to follow. If you’re having trouble following them, you may consider hiring a professional to help fill out your 8606.
https://www.irs.gov/pub/irs-pdf/i8606.pdf
It seems my CPA did not include $5500 contribution made for 2014 tax year (between Jan 2015 and April 15, 2015)- line 1 on 8606 is empty. He started with line 2- basis of $15500 (total contributions for 2011,2012, 2013), and moved forward. So I have an extra $5500 sitting in my Roth IRA that is unreported to IRS.
How do I correct this omission when I file for 2015 tax, using turbo tax? Which form should I use?
Thank you
2014 1040X and a 2014 8606
Could you please sent the link to the tutorial that walks us through how to do traditional and roth ira (form 8606) on turbo tax, It had snap shots of every tab on turbo tax.
Thank you
I’ve decided to do a backdoor roth for 2015 (and 2016). I havent made my contributions yet. If I contribute $5500 for 2015 and $5500 for 2016 (which Vanguard lets you select and do at the same time), can I rollover all $11000 at once to a roth IRA? Or do I need to do separate transactions, like perform the backdoor roth for 2015 now and the backdoor roth for 2016 in June, for example?
You can do it now.
Yes, you can do the contributions and the conversion all at once.
I have been doing roth conversions for the last 2 years. But I have been contributing late between jan to april of the following year and then converting it immediately.
my 8606 is therefore not as clean. Line 2 has total basis of 5500 (is that correct?)
when I enter these values following the tutorial that u suggested in turbotax, it fills out 8606 a little diff
it leaves line 6-12 empty. I think you mentioned that in one of your other posts.
Is there a way to correct it?
I manually filled out form 8606 and plan on mailing in my taxes instead of filing electronically. Is that what you are doing?
I appreciate ur help
Turbotax allows you to go into “Forms mode” and put whatever you want on those lines. I didn’t look all that closely at my 8606s this year but Turbotax probably did the same thing to mine. I didn’t do it manually. I’ve done it both ways in the last few years and the IRS hasn’t cared one way or the other so far.
Can u do that in the online version. I am using online home and business.
Is line 2 supposed to be 5500 if i have been doing contribution and conversion between jan to april of following year?
No, unfortunately you need the downloaded version. Major pain I know and the reason I’ve been buying the download version the last few years.
The instructions for line 2 say:
Generally, if this is the first year you are
required to file Form 8606, enter -0-.
Otherwise, use the Total Basis Chart,
later, to find the amount to enter on
line 2
The chart says:
IF the last Form 8606 you filed was
for . . .
THEN enter on line 2 . . .
A year after 2000 and before 2015 The amount from line 14 of that Form 8606
A year after 1992 and before 2001 The amount from line 12 of that Form 8606
A year after 1988 and before 1993 The amount from line 14 of that Form 8606
1988 The total of the amounts on lines 7 and 16
of that Form 8606
1987 The total of the amounts on lines 4 and 13
of that Form 8606
So the way I read that is you just need to go to last year’s form and use what’s on Line 14. If this is your first 8606, use zero.
Started Attending anesthesia July 1st 2015
Married Filing Jointly: Total Income 178k tax year 2015
AGI: 172k
Taxable Income 136k
Getting 9k back in return, TurboTax
Also have 30k sitting in South Carolina retirement acct from residency (TIAA)
1. I cant find in the post about this:
-Can the Roth IRA be opened in 2016(aka right now) for contributions for 2015 taxes?
2. Since I fall under the Roth exclusion and I paid taxes on the money I’m using to do this:
-Simplicity would say I just open my wife and I an account with VanGuard and put 5500k each? No back door needed. true?
3. Any quick thoughts on that 30k sitting at TIAA? Conversion to another account that would be more useful this year since my income goes way up in 2016?
1. Yes
2. What is your MAGI? MFJ the limit is $183K, less than your total income, so I think you can just do direct contributions this year.
3. “This year” is over. You’re already in 2016. I agree it would have been a great idea to convert it in 2015, but it’s not 2015 any more. You can still convert it, you can leave it there, or you can roll it into another 401(k). But rolling it over to an IRA, the traditional advice, will cause you pro-rata problems with future backdoor Roth IRAs.
In March 2015, I made a non-deductible late contribution of $5,500 for 2014 into a newly set up traditional IRA account on Fidelity online. I about a week I converted it to Roth IRA.
I am doing my taxes on Turbotax and now notice that the 1099-R that Fidelity sent me has $5,500 entered into box 2a (taxable amount). Both the boxes in 2b of the form are checked. (Taxable amount not determined & Whole disbursement). Box7 (Distribution code) is entered as 2 and IRA/SEP/SIMPLE box is checked.
The numbers and form are similar for my non-working spouse.
Should I contact Fidelity and have them correct the 1099-R box 2a? If so, should I ask for any other change/correction to be made on the form?
No. My 1099R from Vanguard says that every year. The key is the “taxable amount not determined” box. Since that’s checked, what is in 2a really doesn’t matter.
Thanks!
Great site, thank you for all your help. I am double-checking my accountant’s work, and after having read everything online, am still not sure she filled out Form 8606 correctly.
BACKGROUND:
In March 2015, I contributed $5,500 to tIRA and shortly thereafter converted same to an rIRA — so this was for year 2014; this was the first time I invested money in any IRA.
In May 2015, I contributed $5,500 to tIRA and shortly thereafter converted same to an rIRA — so this is for year 2015.
In January 2016, I contributed $5,500 to tIRA and shortly thereafter converted same to an rIRA — so this will be for year 2016.
This is how my accounts have filed out Form 8606 for 2014 and have done it in draft in 2015.
FORM 8606, Year 2014.
Lines:
1) $5,500
2) 0
3) $5,500
4) 0
5) $5,500
6-12) 0
13) 0
14) $5,500
15) 0
16) $5,500 <<<= is this correct? does it make a difference?
17) $5,500 <<<= is this correct? does it make a difference?
18) 0
19-25) 0
FORM 8606, Year 2015.
Lines:
1) $5,500
2) $5,500
3) $11,000
4) 0
5) $11,000
6-12) 0 <<<= is this correct? Not sure which software my acct is using, maybe TurboTax and that's why it's blank.
13) $11,000
14) 0
15) 0
16) $11,000
17) $11,000
18) 0
19-25) 0
Your help would be greatly appreciated! I think I just need to get over this hump year, and next year, assuming I make the contribution and conversion in the same year as the taxable year, my form 8606 will look much cleaner.
It doesn’t sound like you’re double-checking your accountants work, it sounds like I am! You’re right that it will be cleaner next year. I doubt your accountant is using Turbotax, but be aware that Turbotax doesn’t do this quite right automatically, although it does end up in the right place in the end.
Okay- so what you did in 2016 won’t show up at all on your 2015 tax forms. The 2014 contribution goes on your 2014 taxes. The 2014 conversion done in 2015, and the 2015 contribution and conversion all show up on your 2015 taxes.
Now, looking at your 2014 form, why is line 4 zero? Shouldn’t that be $5500. Then line 5 $0. That probably doesn’t matter since Line 15 is still right. But lines 16 and 17 are totally wrong. They should both be zero. Does it matter? I guess not since there is still no tax due on Line 18. But it’s wrong.
Okay, now the 2015 form. Line 8 should be $11,000, no? 9 Should be $11,000 too. 10 should be 1. 11 should be $11,000. Does it matter? I guess not since line 15 equals the $0 it should. 16-25 looks fine too. So your accountant got to the right place, but there are a few wrong entries. Kind of similar to how Turbotax screws it up. I’ve sent them in with issues like that before without seeing what Turbotax was doing and the IRS didn’t have a problem with it. In the end, it doesn’t matter because the only things that go anywhere besides this form are lines 14, 15, 18, and 25 and those are all right. The rest is basically a worksheet.
Accountants have a lot of trouble with this form for some reason and computers have even more trouble.
What’s the difference between a roth IRA and roth 401(k)? Is it possible/does it make sense to have both?
Higher contribution limits, no income limits, and employer must offer it (or you must be self-employed) with the Roth 401(k). Both are after-tax. Yes, it’s possible and sometimes it even makes sense. In my case, I do a tax-deferred 401(k) (actually 3) and two backdoor Roth IRAs.
I am currently a fellow who is graduating this year. I have done roth IRAs contributions for the last couple of years but this year don’t know where my income will be on eligibility to contribute without doing a backdoor conversion. If I don’t want to wait to see what my actual income will be should I just do a conversion just to cover myself if I am over the limit?
Yes, I’ve done an unnecessary backdoor Roth before for that exact same reason. No big deal. Far easier than unwinding one.
Hi, I am currently a resident and I have opened a Roth IRA for myself and my spouse this year (2016) and have made my first contributions of $5,500 for each Roth IRA. I have $30,000 (taxes already paid for) that I saved up from my previous work and I wanted to know if there is any way to place the entire amount into a traditional IRA and then convert the entire amount into a Roth IRA (using the backdoor IRA method) or can I convert only $5,500.
Please let me know how I can place the full amount into the Roth IRA account.
Sorry. Can’t do that. I suppose you could put it into a 401(k)/403(b) if you have one available to you. Just choose the Roth option. If you have self-employed income you could put it into an individual Roth 401(k) as well, or even a SEP-IRA and convert that whole thing. On Jan 2nd, you can do another $5500 for you and your spouse. 2 spouses and 2 years gets you to $22,000, whihc is pretty close to $30K.
Hi,
I am an independent contractor.
I have an individual 401k plan and contributed $56ooo to it for 2015. I also have backdoor Roth for myself and spouse and I contributed $5500 for each one of us for 2016. I will make contribution into individual 401k for 2016 soon. What is the maximum amount that I can contribute into my 401k account as an independent contractor only?
Also beginning next year I will be hired and hence on W2- so no longer have 1099 misc. The employer’s retirement plan is unfavorable and hence I will opt not to participate in it. Being on W2, what option is out there for me to contribute to some retirement plan other than just $5500 to a backdoor Roth?
Thank you
I hope you’re over 50 if you put $56K in it. The limit was $53K for those under 50.
If you are under 50 and have sufficient self-employed income (~ $185K-$275K) income, you can put up to $53K into an individual 401(k) in 2016. If you have no self-employed income, you’re stuck with what your employer offers you plus backdoor Roth IRAs and a taxable account.
Here’s the pickle I find myself in now, and hope someone can help me figure out how to proceed.
I have two problems:
1) I made a $5500 nondeductible tIRA contribution in March 2016 *for* tax year 2015. I converted it to a Roth in 2016. I now want to make a $5500 tIRA contribution for 2016 and covert that to a Roth in 2016 as well. My question are: 1A) do I treat both conversions as a single conversion on form 8605? And 1B) what line do o put the minimal earnings in on the tax form 8606?
2) this is where it gets more confusing. My wife and I both made Roth contributions in March 2015 for 2014 tax year. At the time, we were eligible to contribute but at a lower rate ($4550 apiece). Somehow, between us, our accountant and our financial advisor we all screwed it ip and STILL over-contributed by $458.33 apiece. The error wasn’t discovered until I had taken over our finances myself (instead of using an advisor) and discovered this past summer, in 2016.
So, summary is we overcontributed in 2015 for 2014 tax year and it wasn’t discovered until 2016, when I took a distribution from both of our Roths to correct the excess contribution. As far as I understand and according to Vanguard, we are on the hook for a tax penalty on the principle ($458.33 apiece) but not any earnings because we discovered the error too late.
Sooo, my questions are: 2A) do I fill out part III of form 8606? And 2B) what form do I use to report the excess contribution/corrected distribution?
Sorry, I know the above was lengthy. Any help would be greatly appreciated!
1A) I don’t know anything about form 8605. But on 8606, yes.
1B) It goes on line 8 with the original $5,500.
2A) Sometimes I wonder why people bother going to see a pro. I can screw my taxes up myself just fine. I would guess you do a 1040X for 2014 and include any relevant corrected forms with that. Then you send in a check for your penalty with that. Or you ignore it and hope the IRS does too and don’t do it again. Or wait for the IRS to tell you what you owe and send them that.
Thanks for the prompt reply, and yes I mean form 8606 (typing on a phone, sorry!).
The only issue I have with ignoring it is that vanguard will probably send me a distribution form so I think I’m going to have to do something, I’m guessing with form 5329.
Then there’s the little issue with Part III of the 8606 form, which seems like I need to fill out.
Frustrating situation to say the least.
Once you know what form Vanguard has sent you (and what it says) the question becomes a lot easier to answer.
Well, I finally figured out how to correct my situation above and my accountant and I are working on getting it sorted out (will take amended returns for 2014 and 2015).
The issue I have now is with Vanguard – I’ve just received my 1099-R from them for my Roth conversion in 2016. The problem I have is that they put my taxable amount (box 2a on form 1099-R) as the ENTIRE conversion amount ($11,003.92 in my case… $3.92 came from the gains I made in the tIRA while it was in the money market account and before I converted it to the Roth). In fact, it should be just the opposite; I contributed to a non-deductible tIRA, so my taxable amount on the conversion should effectively be $0.00… MAYBE $3.92, but the way the numbers work out on my Form 8606 I think $0.00. The strange thing is that box 2b is also checked on my 1099-R form, which states the taxable amount was “not determined.”
Has anyone experienced this with Vanguard? I called them basically didn’t get any help at all. I wondered if I should get a 1099-R *Corrected* form but they say they don’t issue those and their excuse was that they do their tax forms very “simply,” and that I should just work this out with my accountant.
I just want to make darn sure I’m not double-taxed on my non-deductible tIRA contribution. Scares me that the form they are sending to the IRS says I owe taxes on $11,000 of money that was already after-tax…
Thanks!
I think lots of people had this issue last year. Doesn’t Vanguard indicate somewhere on the 1099-R that they haven’t figured the tax for it or something which gives you free reign to figure it yourself.
Yeah, after doing some more research on it last night after leaving my post here, it looks like it’s standard operating procedure for Vanguard. Should all get worked out when I file my taxes, so long as I file an accurate Form 8606.
Hello,
I worked as an independent contractor in 2015 and 2016. Starting 2017 I became employed again. What will happen to my EIN number? if I am to resume my status as self employed in the future can I use the same EIN number and start contributing to my individual 401k account?
Thank you
Yes. You’re still in business. You just have no profit this year.
First timer with backdoor roth here: In 2016 I rolled over a small previous retirement account to my tIRA account then converted that to roth money – this number ~$3000 is reflected on my current 5498. My tIRA balance was 0.01 on Jan 1st, 2017. I then made a delayed backdoor roth conversion in Jan 2017 for the 2016 tax year. When filling out my 8606 for 2016, do I need to wait for the updated 5498 to be sent to me (april/may 2017) or can I just fill it out showing the $5500 backdoor roth contribution I made – in other words do the values on the 5498 and the 8606 have to be the same? Does the rollover I made above complicate any of this?
That $3000 will show up on your 8606. When it asks about Roth conversions you made, you’ll need to include that amount. Just work your way through the instructions and do what they say and you’ll get it right. I wouldn’t worry about the 5498s as long as your 8606 is accurate as to what actually happened (a $5,500 IRA contribution and a $3000 Roth conversion.) The conversion done in 2017 goes on the 2017 8606.
My first time doing the back door roth I opened my traditional IRA and funded with $5500 late December, but the money wasn’t “available” to convert to Roth, so my conversion didn’t occur until Jan the following year. So it shows I had a basis in the traditional IRA on Dec. 31st. What do I need to do in terms of my taxes? To make matters worse, this was with my last years taxes (put money in late 2015, converted 2016) and didn’t get filed, so I have to make an amendment. So the conversion occurred in 2016 and I have since funded and converted again for 2016, but I need to submit something for my funding of the traditional IRA from 2015, and not sure how to fill out the form for this year.
Sounds like you need to do a 2015 1040X with a 2015 8606. On your 2016 8606, you’ll include the basis from 2015 and you’ll need to note the 2016 contribution and the conversions.
I have a question about filling out the 8606 – My Edward Jones guy converted $5066.61 for 2105 (in March 2016) and $5500 for 2016 (a couple of days later). I am really confused what to put on line one and two of the 8606. I am assuming the rest of the form would follow your 2015 example above?
Thank you for you help
That all sounds fine. You just need to fill out the form correctly. Contributions (presumably both 5,500 but double check) go on your 2015 and 2016 8606s. All the conversions show up on your 2016 8606 ($10,566.61). Is there a certain line you’re having trouble with?
So would line 1 be $5500 (for 2016 contribution ) and line 2 $5066.81 (for 2015 contribution) which makes line 3 $10,566.81?
I can figure out the rest following your form 8606nexample but just want to be sure I put the correct numbers in the first two lines. This has been so frusterating. Thank you for your help I really really appreciate it.
Are we talking about the 2015 8606 or the 2016 8606? I think you’re talking about the 2016 8606. If so, then yes, if you contributed $5,500 to a traditional IRA for 2016 then line 1 is $5,500.
Line 2 is your basis. That’s basically what your previous non-deductible contribution was. So if that was $5066.81, then put $5066.81 there. If you contributed $5000 and had $66.81 in gains before the conversion, then put $5000 as your basis.
Line 3 is the sum of 1 and 2.
Line 2 confuses a lot of people, including accountants.
Thank you!
WCI let me start by thank you, I literally read your website about 3 times a week if not more.
I am similar to the person above, and have read a lot of the comments from the other page which brought me to this page…as I was attempting to figure It out myself, but I’d rather ask then guess. I appreciate your time. I also hate Turbo Tax as I think that is why I am here. It filled out a 5329, saying I was bad and put a fine, versus a 8606 (side questions: anyone any idea how to fix that? )
I was the procrastinator last year (I blame residency), this year a new attending so got it right. But I gained $7.05 on my 2016 contribution (that I made prior to April in 2017, and coverted 5507.05 in May 2017), and I gained 1.03 on my 2017 contribution (converted in Dec 2017), prior to converting them. Thus I converted in 2017 a total of 1108.08. 1) was I not supposed to/legally allowed to covert the extra 8.08, and if not how to I fix this? 2) Is there another tax form I should also be generating for doing this, for example like the 5329 Turbo tax created?? ( or should the number from line 18 just go onto my 1040 on line 15B and nothing else? … if so does anyone know how to make Turbo tax do this???)
Is this what my 2017 8606 should look like
Block 1: 5500
Block 2: 5500
Block 3: 11000
Block 4: 0
Block 5:11000
Block 6: 0
Block 7: 0
Block 8: 11008.08
Block 9: 11008.08
Block 10: 0.9993
Block 11: 11000
Block 12: 0
Block 13: 11000
Block 14: 0
Block 15: 0
Block 16: 11008.08
Block 17: 11000
Block 18: 8.08
19-25: Blank
Thank you everyone.
https://thefinancebuff.com/how-to-report-backdoor-roth-in-turbotax.html. (found that for the turbo tax issue, I will give this a try, if you still wouldn’t mind just letting me know what you think about the 8606 I would appreciate it…I want to make sure by having converted gains I didn’t do something bad.
Read this post:
https://www.whitecoatinvestor.com/pennies-and-the-backdoor-roth-ira/
You can convert everything in there. No limits on conversions. You just have to pay taxes on the gains when you convert gains. Your basis is $5,500, so you don’t pay taxes on that. Everything goes on Form 8606, there is no other form. Did I answer all your questions?
Do yourself a favor and quit making your life complicated. Do your contribution all at once during the calendar year and do your conversion the next day.
Thank you so very much for all the educational guidances on this site. I have a similar situation. With intention of doing backdoor Roth IRA contribution, I made a non-tax deductible traditional IRA contribution of 5500 on 4/13/18 for year 2017 (speaks for my level of procrastination not only for backdoor Roth but also for filing taxes). My CPA did report it on 8086, however he did not report any Roth conversion on part II as I could not make that in time. Those 5500 are sitting in a money market and no gains thus far. My questions is: can I transfer it to Roth IRA now (along with making a new 5500 traditional IRA contribution for year 2018 and convert it to Roth IRA as well) and report conversion of 11000 on 2018 tax return? It seems to me that this satisfies all 3 conditions proposed on your original BackDoor Roth IRA (0 $ in traditional IRA account as of 12/31/2017, 5500 $ contribution and later Roth conversion) but wanted to get your input. Thanks ton in anticipation.
How could you do a Roth conversion before 12/31/17 if you didn’t make the contribution until 4/13/18? The conversion steps gets reported on your 2018 taxes.
Yes, you can transfer it to the Roth IRA now and you can do your 2018 Backdoor Roth too.
Hi,
I am an independent contractor. Recently I have moved from my rented property to my own house. I know IRS allows moving expenses related to job relocation as deductible. However, since I work as a locum physician, will my moving expenses be counted as tax deductible?
Thank you for your time
Here’s the rules: https://www.irs.gov/taxtopics/tc455.html