Author Topic: 1099-R vs 8606 for Traitional to Roth IRA conversion  (Read 490 times)

Radioherd88

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1099-R vs 8606 for Traitional to Roth IRA conversion
« on: February 01, 2019, 05:18:42 PM »
Hi All,

I've confused myself doing my tax return through H & R Block:

In 2017 I contributed the max to a Traditional IRA. Upon doing taxes in 2018, i realized the traditional IRA was defunct as we make over the AGI limit to qualify for the contributions being tax free. Thus, decided may as well convert to a Roth so it will be tax free on the back end....

I made the conversion in Feb 2018 after i'd already done my tax return for 2018.

Now in 2019 i'm trying to report this conversion but not sure how to do it as in H & R Block it won't let me say i converted 6k from traditional to IRA as it wants me to say i contributed the 6k to the traditional in 2018 (but i didn't i contributed it in 2017), so how do i report a conversion in 2018 for funds that were added in 2017?

I believe the form to declare that the conversion should be tax free (as paid full tax on the contribution in the traditional already) is 8606, but it's this form that wants me to say i contributed it in 2018......

Also - form 1099-R is assuming that i should be taxed on the 6k as it doesn't know that i already paid the tax on this amount....

Anyone come across this issue - and how did they solve it?

Thanks!

turneja6535

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Re: 1099-R vs 8606 for Traitional to Roth IRA conversion
« Reply #1 on: February 01, 2019, 06:39:17 PM »
Did you file form 8606 for tax year 2017 reporting your non deductible ira balance?

For the 2018 taxes, in the desktop version of H&R Block it asks you when you fill out the 1099-R section if you converted it.  You should wind up with a 1099-R and an 8606 for this year.  Your prior basis on line 2 of the 2018 8606 would be the 2017 $5500, line 13 for your non taxable distributions would be $5500 and your new basis going forward on line 14 would be 0.

Radioherd88

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Re: 1099-R vs 8606 for Traitional to Roth IRA conversion
« Reply #2 on: February 04, 2019, 03:20:46 PM »
Yeah i didn't do the 8606 in 2017 for the non deductible IRA balance as i wasn't aware of the need to do it at that time.

So, because i didn't - do i just add the amount that i contributed in 2017 in this year's 1099-R (even tho i contributed nothing this year, i only converted it) and this will work?

Or, something else entirely because i missed that 2017 8606?

Thanks!

MDM

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Re: 1099-R vs 8606 for Traitional to Roth IRA conversion
« Reply #3 on: February 04, 2019, 06:05:59 PM »
I made the conversion in Feb 2018 after i'd already done my tax return for 2018.
Did you deduct the 2017 tIRA contribution on your 2017 taxes?  Assuming "no" then
- File the 2017 8606 ASAP.  You don't need to amend your 2017 1040, just send in the 2017 8606.
- File your 2018 taxes, including your 2018 8606, as if you had filed the 2017 8606 a year ago.

Radioherd88

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Re: 1099-R vs 8606 for Traitional to Roth IRA conversion
« Reply #4 on: February 06, 2019, 01:47:58 PM »
I made the conversion in Feb 2018 after i'd already done my tax return for 2018.
Did you deduct the 2017 tIRA contribution on your 2017 taxes?  Assuming "no" then
- File the 2017 8606 ASAP.  You don't need to amend your 2017 1040, just send in the 2017 8606.
- File your 2018 taxes, including your 2018 8606, as if you had filed the 2017 8606 a year ago.

I didn't deduct the 2017 tIRA contribution no (mostly because the HRBlock software wouldn't let me - then i found it we were over the income level to be eligible). Ok, so if i'm doing the separate 8606 for 2017, do i need to use a 2017 form? The current form says 2018:

https://www.irs.gov/forms-pubs/about-form-8606

MDM

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Re: 1099-R vs 8606 for Traitional to Roth IRA conversion
« Reply #5 on: February 06, 2019, 03:51:32 PM »
Ok, so if i'm doing the separate 8606 for 2017, do i need to use a 2017 form?
Yes.

Quote
The current form says 2018:

https://www.irs.gov/forms-pubs/about-form-8606
See the "All Form 8606 Revisions" link on that page.

Radioherd88

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Re: 1099-R vs 8606 for Traitional to Roth IRA conversion
« Reply #6 on: February 07, 2019, 02:38:10 PM »
Ok, so if i'm doing the separate 8606 for 2017, do i need to use a 2017 form?
Yes.

Quote
The current form says 2018:

https://www.irs.gov/forms-pubs/about-form-8606
See the "All Form 8606 Revisions" link on that page.

Ok thanks MDM - upon further review I did file an 8606 in 2017 (hr block system did it automatically hence I didnít realize) so Iíve mostly managed to declare the non deductible IRA contributions for 2017 to create my basis.

Now there was a $438 IRA contribution in 2018 that keeps showing as part of my income (as I converted it to the Roth) and it wonít let me seem to declare this as non deductible for some reason. One of the questions asked me if Iíd converted it within 60 days of contributing so does that somehow impact whether that conversion is taxed?

MDM

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Re: 1099-R vs 8606 for Traitional to Roth IRA conversion
« Reply #7 on: February 07, 2019, 04:13:46 PM »
Now there was a $438 IRA contribution in 2018 that keeps showing as part of my income (as I converted it to the Roth) and it wonít let me seem to declare this as non deductible for some reason. One of the questions asked me if Iíd converted it within 60 days of contributing so does that somehow impact whether that conversion is taxed?
What was the $438?

Radioherd88

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Re: 1099-R vs 8606 for Traitional to Roth IRA conversion
« Reply #8 on: February 10, 2019, 04:31:21 PM »
I added the $438 as part of 2018ís IRA contributions in 2018 before I did 2017 taxes and realized I was eligible for the deductible IRA and converted it all to Roth a couple weeks later

Our income is over the limit to qualify as deductible...

MDM

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Re: 1099-R vs 8606 for Traitional to Roth IRA conversion
« Reply #9 on: February 10, 2019, 04:53:08 PM »
I added the $438 as part of 2018ís IRA contributions in 2018 before I did 2017 taxes and realized I was eligible for the deductible IRA and converted it all to Roth a couple weeks later

Our income is over the limit to qualify as deductible...
Does the following show what you did (assuming your 2017 contribution had grown to $5600 by the end of that year)?  If so, make those entries in the 'Form8606' tab of the case study spreadsheet, then see how your 2017 and 2018 forms 8606 from H&RB should look in the rows below.


Radioherd88

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Re: 1099-R vs 8606 for Traitional to Roth IRA conversion
« Reply #10 on: February 11, 2019, 04:28:44 PM »
Yeah that looks right - ok let me play around with it and let you know the result

Thanks for the link!