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Recharacterizing, Back Door Roth, & Form 8606

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  • Recharacterizing, Back Door Roth, & Form 8606

    I contributed $6000 directly to my Roth in Jan 2021 and just recharacterized it to a traditional IRA in Dec 2021 as I realized my AGI would be too high.

    Vanguard mentioned that it would calculate any earnings on the contributions automatically. When the transaction was finalized, there was $7,152 in the IRA, which I just converted the full amount back into the Roth.

    When filling out Form 8606 - does this look correct?

    $6000 on Line 1
    $1152 on Line 2 ?
    $7152 on Line 3
    $0 on Line 4
    $7152 on Line 5
    0 on Line 6
    $1152 on Line 7 ??
    $7152 on Line 8
    $8306 on Line 9 ?
    0.861 on Line 10
    $6159 on Line 11 ?
    $993 on Line 12 ?
    $7152 on Line 13
    $0 on Line 14
    $160 on Line 15?
    $7152 on Line 16
    $6159 on Line 17
    $994 on Line 18?

    Thanks in advance.




  • #2
    I would attach a picture of your filled out Form 8606. It’s much easier to assess looking at the actual form rather than the line by line presentation.

    Comment


    • #3
      Sorry, that would have been smart.

      Here is the attached image

      Attached Files

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      • #4
        where did you get the line 2 basis amount? did you follow along the instructions?

        if you have zero basis and no other IRA balances the entire amount of gains above contribution will be taxable

        Comment


        • #5
          Originally posted by jacoavlu View Post
          where did you get the line 2 basis amount? did you follow along the instructions?

          if you have zero basis and no other IRA balances the entire amount of gains above contribution will be taxable
          I think i misunderstood that part- I put down 1152 which is how much the intitial 6000 grew by before i recharacterized it to a traditional IRA. So that line should be zero?

          Comment


          • #6
            the instructions to the form are pretty clear. are you using them?

            it should likely me zero my guess. but if you’ve done backdoor roths in the past it will instruct you to go look at last year form and make sure you had no carryover basis

            Comment


            • #7
              Originally posted by jacoavlu View Post
              the instructions to the form are pretty clear. are you using them?

              it should likely me zero my guess. but if you’ve done backdoor roths in the past it will instruct you to go look at last year form and make sure you had no carryover basis
              I wasn't- you're right- its pretty clear. My basis is zero as this is the first time doing a backdoor roth

              At the end the taxable amount comes out to 1152, which seems obvious now as this is what the roth grew to in the 11 months. Thanks for your help.

              Comment


              • #8
                Originally posted by snowman51 View Post

                I wasn't- you're right- its pretty clear. My basis is zero as this is the first time doing a backdoor roth

                At the end the taxable amount comes out to 1152, which seems obvious now as this is what the roth grew to in the 11 months. Thanks for your help.
                good lesson. certainly don’t feel bad, i’ve had a CPA fill out my form incorrectly before.

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