Backdoor Roth IRA question

[PNWskindoc]

I'm sorry if this has been asked before, but I contributed $11,000 into my Roth IRA in 2017. $5500 for 2016 and $5500 for 2017. I received my 1099-R from Vanguard today and my gross distributions for is $11,000. Do I just enter that into turbotax for 2017? Or do I have to go amend my 2016 tax return?

Also, my wife stays at home so she doesn't have an earned income, but I did a backdoor Roth for her anyways. When I try to enter her information into turbotax, it keeps telling me that her IRA contribution is not permitted because it is more than her earned income (which is 0) and that I will be subject to a 6% penalty. Any thoughts on this?

Thanks so much

[Peds]

look up WCI article on filling out form 8606.

do you file jointly?

[PNWskindoc]

Thanks. I'll look that post up. Yes, my stay-at-home-wife and I are filing jointly.

[DMFA]

PNWskindoc wrote:

I’m sorry if this has been asked before, but I contributed $11,000 into my Roth IRA in 2017. $5500 for 2016 and $5500 for 2017. I received my 1099-R from Vanguard today and my gross distributions for is $11,000. Do I just enter that into turbotax for 2017? Or do I have to go amend my 2016 tax return?

Also, my wife stays at home so she doesn’t have an earned income, but I did a backdoor Roth for her anyways. When I try to enter her information into turbotax, it keeps telling me that her IRA contribution is not permitted because it is more than her earned income (which is 0) and that I will be subject to a 6% penalty. Any thoughts on this?

Thanks so much

Click to expand...

Did you file a form 8606 for *only* the $5,500 non-deductible contribution for your 2016 taxes?

Your 2017 will show the new $5,500 contrib (1), the 2016 $5,500 basis (2), $11,000 total (3), the $11,000 conversion (4), completely non-taxable.

Illustrations attached.  For the one with the contrib, basis, and conversion, just add 1 to all the years - I can't find a 2017 form yet

[PNWskindoc]

Hi DMFA,

It looks I did fill out a form 8606 for 2016. Is it unusual that my 1099-R for 2017 is saying that my gross distributions and taxable amount is 11,000?

 

[DMFA]

PNWskindoc wrote:

Hi DMFA,

It looks I did fill out a form 8606 for 2016. Is it unusual that my 1099-R for 2017 is saying that my gross distributions and taxable amount is 11,000?

 

Click to expand...

The box "taxable amount not determined" in box 2b should be checked. If the contributions were not deducted, then their conversion is not taxed.

[PNWskindoc]

DMFA wrote:

PNWskindoc wrote:

Hi DMFA,

It looks I did fill out a form 8606 for 2016. Is it unusual that my 1099-R for 2017 is saying that my gross distributions and taxable amount is 11,000?

 

Click to expand…

The box “taxable amount not determined” in box 2b should be checked. If the contributions were not deducted, then their conversion is not taxed.

Click to expand...

Thanks DMFA for the response. I attached a screenshot of my 1099-R. The "taxable amount not determined" box has an "x" in it. Do you mind taking a look? Thanks!

[Dreamgiver]

That is exactly what mine looks like. Have you checked to see when you converted the amount for 2016? I think what happened with mine is that I ended up converting both 2016 and 2017 amounts in 2017.

[PNWskindoc]

Yup, I converted both 2016 and 2017 contributions in 2017.

[DMFA]

PNWskindoc wrote:

DMFA wrote:

PNWskindoc wrote:

Hi DMFA,

It looks I did fill out a form 8606 for 2016. Is it unusual that my 1099-R for 2017 is saying that my gross distributions and taxable amount is 11,000?

 

Click to expand…

The box “taxable amount not determined” in box 2b should be checked. If the contributions were not deducted, then their conversion is not taxed.

Click to expand…

Thanks DMFA for the response. I attached a screenshot of my 1099-R. The “taxable amount not determined” box has an “x” in it. Do you mind taking a look? Thanks!

Click to expand...

YOU OWE TAXES ON 37 CENTS.  PAY UP, YOU DELINQUENT SCOFFLAW! [Kidding; it rounds to the nearest dollar.]

So since that "not determined" in 2b is checked, it's therefore up to you to determine the taxability by form 8606.



Line 15 determines that taxable amount.  Assuming it is as above (just add 1 to all the years; that'll be what your 2017 looks like), the taxable amount is zero.

Which tax prep program do you use?  Many tax prep programs go about doing the 8606 via a series of yes/no questions and entering values as opposed to doing it manually as above.  The Finance Buff has outlined how to do it using TurboTax, TaxACT, and H&R Block's software.

[PNWskindoc]

Thanks. I use TurboTax and was actually following along the finance buffs tutorial but I just wanted to make sure that my 1099-R was correct.

[Wood]

DMFA wrote:

PNWskindoc wrote:

DMFA wrote:

PNWskindoc wrote:

Hi DMFA,

It looks I did fill out a form 8606 for 2016. Is it unusual that my 1099-R for 2017 is saying that my gross distributions and taxable amount is 11,000?

 

Click to expand…

The box “taxable amount not determined” in box 2b should be checked. If the contributions were not deducted, then their conversion is not taxed.

Click to expand…

Thanks DMFA for the response. I attached a screenshot of my 1099-R. The “taxable amount not determined” box has an “x” in it. Do you mind taking a look? Thanks!

Click to expand…

YOU OWE TAXES ON 37 CENTS.  PAY UP, YOU DELINQUENT SCOFFLAW! [Kidding; it rounds to the nearest dollar.]

So since that “not determined” in 2b is checked, it’s therefore up to you to determine the taxability by form 8606.



Line 15 determines that taxable amount.  Assuming it is as above (just add 1 to all the years; that’ll be what your 2017 looks like), the taxable amount is zero.

Which tax prep program do you use?  Many tax prep programs go about doing the 8606 via a series of yes/no questions and entering values as opposed to doing it manually as above.  The Finance Buff has outlined how to do it using TurboTax, TaxACT, and H&R Block‘s software.

Click to expand...

Incredibly helpful. Thank you so much for the time you took to explain this!