Super Tough , challenging Backdoor IRA plus return of excess IRA contribution issue

[PecanPie]

Hi All,

Through my stupid error, I have got myself into a return of excess IRA contribution issue on top of the backdoor IRA conversion.


Accidentally made 5500 $ excess contribution to my wife's Traditional IRA in 2018


Realized this problem in 2021 and removed the excess contribution in 2021. ( also paid penalty of each year 2018, 2019,2020 for not removing excess contribution on forms 5329)


Also, I did the backdoor IRA conversion of wifes basis of 29,000$ (including 2021 contribution) for the first time.

Value of her TIRA on dec 31st 2021 was zero.


for 2021 tax return-- I am going to file both forms 8606 and form 5329.

On form 8606-- on Line 15C --im getting taxable amount of the 5500 distribution( return of excess) as 877
on line 18 --I'm getting taxable amount of the 2021 backdoor conversion as 4623.


so total of 5500 (887+4623) goes on line 4b on my federal 1040. ( only added 5500$ to my taxable income)


1. Does this calculation look correct.

2. If yes, Should I also add this 5500$ on my NJ 1040 ( state of my residence)

My Hrblock live tax professional has no clue what Im talking about.

Thank you.

[Larry Ragman]

Here is a WCI post on the topic: https://www.whitecoatinvestor.com/ho...-contribution/

Just on the return of excess, if it was an after tax non deductible contribution in the first place I do not think it should add to your taxable income. If originally deductible, then it would be income.

Yes, if there is either an addition or a subtraction to federal income you should pull through to your state taxes.

[jfoxcpacfp]

Agree with Larry - you were ok until the part about adding the $5,500 to income. Go back and check your inputs.