Turbotax Backdoor Roth brain fart

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rene
Posts: 233
Joined: Wed Mar 19, 2008 9:33 pm

Turbotax Backdoor Roth brain fart

Post by rene » Sun Mar 19, 2017 1:11 am

Mental block....

In March 2017 I contributed $5500 (non deductible) to Traditional IRA for tax year 2016 and converted few days later to Roth (backdoor). The contribution is *for* tax year 2016 but the conversion is done *in* 2017.

Just to get my sanity back :

I will enter my *contribution* (form 5498) in tax year 2016
I will enter my *conversion* (form 1099-R) in tax year 2017

Is the above correct?

DSInvestor
Posts: 10522
Joined: Sat Oct 04, 2008 11:42 am

Re: Turbotax Backdoor Roth brain fart

Post by DSInvestor » Sun Mar 19, 2017 1:32 am

Yes. Enter your 2016 Traditional IRA contribution into your 2016 tax return. If your contribution is non-deductible (covered by employer plan and high income), Turbotax will add form 8606 to track your IRA basis ($5500). This basis will carry forward to line 2 of the next years 8606 form and allow you to convert the basis tax free. Note that your 2016 5498 form will probably not arrive until later in the year, so just enter your IRA contributions now.

For your 2017 contribution, think about making those and converting those to Roth IRA before 12/31/2017. This way your 2017 tax return/8606 will show 11K basis and the 11K conversion leaving nothing to carry forward to 2018.

LateStarter1975
Posts: 646
Joined: Tue Jul 02, 2013 4:50 pm

Re: Turbotax Backdoor Roth brain fart

Post by LateStarter1975 » Sun Mar 19, 2017 10:10 pm

DSInvestor wrote:Yes. Enter your 2016 Traditional IRA contribution into your 2016 tax return. If your contribution is non-deductible (covered by employer plan and high income), Turbotax will add form 8606 to track your IRA basis ($5500). This basis will carry forward to line 2 of the next years 8606 form and allow you to convert the basis tax free. Note that your 2016 5498 form will probably not arrive until later in the year, so just enter your IRA contributions now.

For your 2017 contribution, think about making those and converting those to Roth IRA before 12/31/2017. This way your 2017 tax return/8606 will show 11K basis and the 11K conversion leaving nothing to carry forward to 2018.


+1
Excellent response and advice
Debt is dangerous...simple is beautiful

RadDoctor
Posts: 6
Joined: Mon Mar 20, 2017 2:50 pm

Re: Turbotax Backdoor Roth brain fart

Post by RadDoctor » Tue Mar 21, 2017 1:23 pm

rene wrote:Mental block....

In March 2017 I contributed $5500 (non deductible) to Traditional IRA for tax year 2016 and converted few days later to Roth (backdoor). The contribution is *for* tax year 2016 but the conversion is done *in* 2017.

Just to get my sanity back :

I will enter my *contribution* (form 5498) in tax year 2016
I will enter my *conversion* (form 1099-R) in tax year 2017

Is the above correct?


Here's a good WCI post about this exact topic, with details on how to fill out the forms: http://whitecoatinvestor.com/late-contr ... -roth-ira/

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