Question regarding form 8606

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Topic Author
FB01
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Question regarding form 8606

Post by FB01 »

Hi,

Have question regarding form 8606 as not sure what to fill where?

I contributed 5500 to Roth IRA in 2015 but my income exceed by end of year so I did backdoor Roth IRA

My Roth IRA increased to 6000 which I transferred to Traditional IRA and then when I moved from traditional IRA to Roth IRA, the value increase to 6250 so I will need to pay tax on 250.

Now when I fill the form, I get the below first question

-Tell us I made contribution to Tradional IRA for 2015. I answer YES

Now it says below…where I am confused

Enter the total amount put to Tradional IRA for 2015, even if you later transferred some or all of it to Roth IRA

It says Note : Do not enter any of the following here
- Roth Contributions (even if you later recharaterzied them to traditonal IRA
- Roll Overs

Total 2015 Traditional IRA contribution______???? (what amount should I be entering over here)

Can you please what should I enter as 2015 Traditional IRA contribution? Should it be 6000?

And then where should I be entering 6250 amoutn which finally moved from Traditonal ira to Roth IRA?


-JR
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livesoft
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Re: Question regarding form 8606

Post by livesoft »

I don't think you made a contribution to a traditional IRA in 2015.

From a quick read of what you wrote in the first post of this thread (meaning I could have this wrong):

1. You made a Roth IRA contribution.
2. You recharacterized the Roth IRA to a traditional IRA.
3. You converted a traditional IRA to a Roth IRA.
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Topic Author
FB01
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Re: Question regarding form 8606

Post by FB01 »

livesoft wrote:I don't think you made a contribution to a traditional IRA in 2015.

From a quick read of what you wrote in the first post of this thread (meaning I could have this wrong):

1. You made a Roth IRA contribution.
2. You recharacterized the Roth IRA to a traditional IRA.
3. You converted a traditional IRA to a Roth IRA.

Correct...that is what I did...so do I need to fill 8606 in that case..if yes..I would appreciate what/where I will need to enter.

-I have already entered 1099-R form which Vanguard send me
-I am using Turbo tax software

Appreciate your help

-JR
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clydewolf
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Re: Question regarding form 8606

Post by clydewolf »

livesoft wrote:I don't think you made a contribution to a traditional IRA in 2015.

From a quick read of what you wrote in the first post of this thread (meaning I could have this wrong):

1. You made a Roth IRA contribution.
2. You recharacterized the Roth IRA to a traditional IRA.
3. You converted a traditional IRA to a Roth IRA.
The OP first put his IRA contribution into a Roth account.
Then with the recharacterization, it was as though the Roth contribution Never Happened!
His contribution to the IRA was a Traditional after tax contribution.

Now the question, did the back door conversion occur in 2015 or will the gains from $5,500 to $6,250 be taxed on his 2016 tax return?
Last edited by clydewolf on Tue Feb 23, 2016 9:40 am, edited 1 time in total.
livesoft
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Re: Question regarding form 8606

Post by livesoft »

FB01 wrote:-Tell us I made contribution to Tradional IRA for 2015. I answer YES
So, answer NO for this question because you didn't make a traditional IRA contribution. What happens?
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Topic Author
FB01
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Re: Question regarding form 8606

Post by FB01 »

livesoft wrote:
FB01 wrote:-Tell us I made contribution to Tradional IRA for 2015. I answer YES
So, answer NO for this question because you didn't make a traditional IRA contribution. What happens?
Wow..no complication now..

Initially, it asked me "Select the kind of IRA's I will contribute for 2015. If you own or contribute to both traditional IRA and Roth IRA , check both here and we will work on traditional IRA first

I was checking both "Traditional IRA" and "Roth IRA"

After your post, I just checked Roth IRA and no complicated question came up.

However, will not have to pay tax on 250 dollars as when I recharacterized the value of my roth IRA increased from 6000 to 6250. Where will I have to put those figures? 1099 does not say anything about tax.

-JR
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livesoft
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Re: Question regarding form 8606

Post by livesoft »

I just did this in a 2014 version of TT:

1. Enter that I made a Roth contribution in the Personal/Deductions&Credits/Retirement and Investments/Traditional and Roth IRA Contributions:

Did livesoft Contribute To a Traditional IRA? NO.
...
Enter Your Roth IRA Contributions: $5500
Tell Us How Much You Transferred: $5500 ('recharacterize' is in the explanation on this page)
Roth IRA Explanation Statement: (click on Fill in Template, careful, if there is any text in the 4 lines of Explanation, then "Fill in Template" will not appear). In the explanation you will put both $5500 and $6000.

That takes care of the Roth contribution and the recharacterization. Now do the conversion. You should have a 1099-R for the conversion, so this goes to Personal/Personal Income/Retirement Plans/IRA ....

Follow the questions CAREFULLY! and report back. Look at Form 8606 and Form 1040.

Also close your eyes and tap your heels together and say " A contribution is not a recharacterization is not a conversion" three times.
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Topic Author
FB01
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Re: Question regarding form 8606

Post by FB01 »

Hi,

This is the first question i am getting

Select the kind of IRA's I will contribute for 2015. If you own or contribute to both traditional IRA and Roth IRA , check both here and we will work on traditional IRA first

I am checking Roth IRA

then it says " Did I make Roth IRA contribution in 2015? Answer yes if you haven't contributed to a Roth IRA yet, but plan to by April 18,2016"

As I have already made in 2015, I select "No"

Then it says "Tell us if I opened any Roth IRAs in 2014 or previous yes"

If I say Yes..quesiton is "Would you like to track my Roth IRA's basis " and I select "NO"

Am I missing something?
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livesoft
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Re: Question regarding form 8606

Post by livesoft »

FB01 wrote:Hi,

This is the first question i am getting

Select the kind of IRA's I will contribute for 2015. If you own or contribute to both traditional IRA and Roth IRA , check both here and we will work on traditional IRA first

I am checking Roth IRA

then it says " Did I make Roth IRA contribution in 2015? Answer yes if you haven't contributed to a Roth IRA yet, but plan to by April 18,2016"

As I have already made in 2015, I select "No"

Then it says "Tell us if I opened any Roth IRAs in 2014 or previous yes"

If I say Yes..quesiton is "Would you like to track my Roth IRA's basis " and I select "NO"

Am I missing something?
I would have answered "Yes" to "Did I make Roth IRA contribution in 2015?"
You certainly want to track your Roth IRA's basis.

And since you answered Yes to "Tell us if I opened ...in 2014 or previous years", then you had better have done so.
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Topic Author
FB01
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Re: Question regarding form 8606

Post by FB01 »

okay...

So for this question I answered "Yes" even though I contributed to Roth IRA in 2015

Q- "Did I make Roth IRA contribution in 2015? Answer yes if you haven't contributed to a Roth IRA yet, but plan to by April 18,2016""

Next Question

Enter Total Roth IRA Contribution for 2015 even if you transferred or Recharacterized some or all of it to Traditional IRA
Note - Include contribution made between Jan 1 2016 to April 18 2016 that you want to include on your 2015 return (FYI..I made contribution in 2015)

My Roth Contribution ____ Should I enter 5500 or 6000 (the amount that was increased before I recharacetrized)

Next Question

Tell us how much you transferred : How much of 5500/6000 that I contributed to this Roth IRA did you switch or recharacterize to your traditional IRA

Amount Switched from Roth IRA to Traditional IRA ____ what amount should I be entering over here...6000 or 6250 (amount that was increased from 6000 to 6250 when I put the money back to my Roth IRA)

After this I get the Expiation Statement Sheet

-JR
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livesoft
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Re: Question regarding form 8606

Post by livesoft »

I have already answered your questions in this post: viewtopic.php?p=2811584#p2811584
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