Hi all,

Every year I make one max. contribution to a traditional IRA and utilize the backdoor roth for a conversion.

I used turbo tax to prepare 2023 taxes, submitted in February. The income limits (as well as employer based 401k offered) should make this a non-deductible contribution, yet for 2023 (and 2022 I have now spotted), Turbotax did not complete part 1. I do not have any other IRA holdings apart from the traditional IRA I used for the conversion (Trad. IRA balance always 0 at the end of the year). My mistake, I didnt spot this earlier that part 1 was not filed.

I pay tax on the conversion, so that is squared away. I am struggling to work out what not filing part 1 does to my taxes owed? If anything?

Any help appreciated!

H

Form 8606 records your non deductible IRA contributions so that you don’t pay tax on that amount when you eventually take a distribution. Not filing the form will result in the non recorded distributions being taxable upon distribution but won’t impact your current taxes, so it is a future issue. I had a similar situation with TT a few years back and when I noticed the issue I forced Turbo Tax to create the form on my next tax return (don’t remember how) and filled in the basis to reflect the cumulative non deductible contributions to date with a simple explanation that TT didn’t create the form and I was bringing it up to date. That seems to have been accepted. Things have changed since then but I believe you can currently file Form 8606 standalone from your tax return with an explanation as to why you are doing so, or you can file an amended return with Form 8606 attached and an explanation as to why. Or, you could try what I did. You should do one of those to avoid being taxed on the contribution twice. Probably submitting an amended return is the right approach, and if you do that state TT failed to include the form with your initial return, you are submitting it now, and there is no change to the tax due. Should be a very simple amended return that you can do manually if TT won’t cooperate. Next year make sure your basis shows the current cumulative total which you might have to adjust manually if you file an amended return manually. Lots of people had this issue over the years.

+1

I think we made our first IRA contribution around 1995 and kept up with IRA contributions and 8606 filings every year until we retired in 2010. There is an 8606 per person if you are married filing jointly. Then, with much lower income, we started doing withdrawals in the form of Roth conversions, filing an 8606 every year for another 12 years, watching that tax free basis slowly go down until we finally had no IRA money left, all Roth. So after about 27 years of filing forms 8606 we are finally finished them. As you say, they are very important to keep up to date with.

Odd it got it wrong. I used Turbotax in 2022 and mine is correct (and has been for the last 10+ years). I also do the same every year, non-dedutable contribution to Trad IRA and the immediately roll it over.
Did it complete Part II to report the conversion to Roth?

Curious, you mentioned "I pay tax on the conversion" - is that any small amount of gain between adding money to the Trad IRA and converting it to Roth IRA?

Yes, you pay tax on the gains which is why it is important to file the 8606 correctly. In our case we converted our IRAs to Roths after 15 years of making contributions when we retired. Roths were not an option back then and we earned too much for a regular Roth contribution or deductible IRA

Part 2 is all squared away, just part 1 missing, and I paid tax on the full amount (both ~6000 each year (whatever the max contribution limit was)).

So basically im an idiot

I have overpaid. So now the debate...

1040X for two years for about ~2200 USD in return. Is it worth the hassle? That im toying with