Let’s discuss how to report a Backdoor Roth IRA on a tax return.
Please see this blog post which has screen caps from a mock tax return reporting the Backdoor Roth IRA on page 1 of Form 1040 and on the Form 8606.
If you have a balance in traditional IRAs, SEP IRAs, and/or SIMPLE IRAs on December 31st, it is likely the Backdoor Roth IRA will not be tax efficient. Read more here:
This video, the show notes, and any comments are for educational purposes only. They do not constitute tax, legal, financial, and/or investment advice for any person. Consult with your own advisors regarding your own matters….(read more)
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Hello Sean, on my W2, Box 13 was not checked. I selected not to go with the employer's Retirement Plan. Should I still check Box 13 within the Tax software for the purpose of the backdoor IRA?
For the sake of simplicity, what are the best months to contribute and convert so that they will all appear in a single years tax forms?
Hello Sean, thanks for the helpful explanation! So, the examples in your blog post would be the correct way to fill out the form every year, assuming there is no balance in an IRA on Dec 31, correct (+/- a few $ for the taxable amount)? I find it tricky to understand exactly what the 'basis' on line 2 means.
extremely informative Sean! I have a peculiar situation where my 2019 Non-Deductible contribution was not converted to ROTH until 2021. Now my 2021 Form 1099-R states I have a gross distribution of $12050. My accountant is incorrectly filing that I have a $6050 of taxable income. How can I explain this to my accountant and to fix the 1040 before it is e-filed?
So this is what is confusing sometimes, my wife and i made a 6k Trad IRA contribution each, then after about a week, we converted that to our Roth IRAs. We did the contribution for 2020 and the conversion was in 2021. Going further we will be doing it within the same year, but it is confusing as to if we are actually paying net taxes. I understand paying taxes on the gains, but i didn't think we would have to pay taxes on the full 6k. Thank you for this video.