Backdoor Roth IRA - Form 8606 - TurboTax

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Backdoor Roth IRA - Form 8606 - TurboTax

Postby spefactor » Fri Feb 01, 2013 4:15 pm

Hi,

This year I did a backdoor Roth IRA (made a non-deductible contribution in 2012 and immediately converted it to a Roth in 2012).

I entered this into TurboTax and Part II is correctly filled out. However, in Part I, line 8 is empty.

I called up TurboTax and the lady mentioned that because what I did is considered a "recharacterization" as it occurred in the same year, and thus line 8 would not be filled in. She didn't seem too sure though.

Can someone tell me if a Backdoor Roth IRA should have line 8 filled out on Form 8606?

Thanks.
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Re: Backdoor Roth IRA - Form 8606 - TurboTax

Postby Don Christy » Fri Feb 01, 2013 4:27 pm

While you wait for SSCritic to tell you the answer :beer , you can read the Instructions for Form 8606 from the IRS.
Ah, make the most of what we may yet spend, Before we too into the Dust descend; Dust into Dust, and under Dust, to lie; Sans Wine, sans Song, sans Singer, and -- sans End! ... Omar Khayyam
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Re: Backdoor Roth IRA - Form 8606 - TurboTax

Postby spefactor » Fri Feb 01, 2013 4:43 pm

Yeah I did read it over and my impression was that this is a conversion and not a recharacterization as the IRS rules state:

"Any recharacterized conversion or Roth IRA rollover from a qualified retirement plan will be treated as though the conversion or rollover had not occurred. Any recharacterized contribution will be treated as having been originally contributed to the second IRA, not the first IRA."

Since I couldn't have originally contributed to a Roth IRA to begin with (hence the Backdoor), it seems this needs to be considered a "conversion" and not a "recharacterization".

However I'm not a tax expert nor very familiar with the backdoor Roth process so I figured I'd ask you guys.

Thanks.
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Re: Backdoor Roth IRA - Form 8606 - TurboTax

Postby mhc » Fri Feb 01, 2013 5:20 pm

spefactor wrote:Hi,

This year I did a backdoor Roth IRA (made a non-deductible contribution in 2012 and immediately converted it to a Roth in 2012).

I entered this into TurboTax and Part II is correctly filled out. However, in Part I, line 8 is empty.

I called up TurboTax and the lady mentioned that because what I did is considered a "recharacterization" as it occurred in the same year, and thus line 8 would not be filled in. She didn't seem too sure though.

Can someone tell me if a Backdoor Roth IRA should have line 8 filled out on Form 8606?

Thanks.


Take a look at:
http://thefinancebuff.com/the-backdoor- ... ow-to.html
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Re: Backdoor Roth IRA - Form 8606 - TurboTax

Postby spefactor » Fri Feb 01, 2013 5:24 pm

Yeah I did visit that site. I deleted my 1099-R, followed his instructions to the T (except minor version issues) and my Form 8606 does not have lines 8, 9, or 10 populated hence why I think this may be an error.
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Re: Backdoor Roth IRA - Form 8606 - TurboTax

Postby mhc » Fri Feb 01, 2013 5:35 pm

spefactor wrote:Yeah I did visit that site. I deleted my 1099-R, followed his instructions to the T (except minor version issues) and my Form 8606 does not have lines 8, 9, or 10 populated hence why I think this may be an error.


Did you see this one:
http://thefinancebuff.com/how-to-report ... botax.html
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Re: Backdoor Roth IRA - Form 8606 - TurboTax

Postby Don Christy » Fri Feb 01, 2013 5:38 pm

FWIW my 2011 8606 completed by my CPA doesn't have Part I completed. Part II is completed. Based on my reading of the instructions, I believe Part I should have been completed, but if my understanding is accurate, it doesn't change the tax calculation. I'll ask my CPA why they (their software more accurately) didn't complete Part I, but I'm not too concerned.
Ah, make the most of what we may yet spend, Before we too into the Dust descend; Dust into Dust, and under Dust, to lie; Sans Wine, sans Song, sans Singer, and -- sans End! ... Omar Khayyam
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Re: Backdoor Roth IRA - Form 8606 - TurboTax

Postby Alan S. » Fri Feb 01, 2013 5:55 pm

In certain situations, some tax software handles the indented lines 6-12 of Form 8606 via a worksheet as a programming shortcut, and it does not create a problem with the IRS as long as Part II is correct.

First, look at your 1099R to confirm that this was processed as a conversion. Box 7 should NOT show a recharacterization code of R. Once that is verified, was there any difference between your contribution amount and your converted amount? If no difference, then line 14 would also be -0- and no taxable amount would show on line 18.
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Re: Backdoor Roth IRA - Form 8606 - TurboTax

Postby LadyGeek » Fri Feb 01, 2013 6:05 pm

This thread is now in the Personal Finance (Not Investing) forum (tax question).
To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
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Re: Backdoor Roth IRA - Form 8606 - TurboTax

Postby spefactor » Fri Feb 01, 2013 11:23 pm

Thanks for the help Alan. My distribution code on 1099-R is 2, line 14 is 0, and line 18 is 0.

It looks like everything is calculated correctly on those parts. Still, I would have hoped to see something filled in on the indented section (6-12). Just checked TaxAct and it has it. My 2011 return (TurboTax) had these sections filled in as well. I guess I'll be ok though.
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