Backdoor Roth

Forum|Forum|5 years ago
March 18, 2021
2 replies
18 views

My client is a doctor. He and his wife make way over the amount permissible for a Roth IRA contribution. So, last week, the doctor contributed $7000 for himself and his wife to a nondeductible traditional IRA... Then, 2 days later, converted both of those contributions to a Roth IRA. This was done for tax year 2020, but the contributions and rollovers happened in March of 2021. So, no 1099-R's. They have no basis in their traditional IRAs other than the $7000 each just contributed. Everything else has already been converted to Roth, Do I just go to Screen 24 and enter the traditional IRA contributions (nondeductible )? What are the steps to a backdoor Roth? Anyone?

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qbteachmt

Level 15

"This was done for tax year 2020, but the contributions and rollovers happened in March of 2021."

Which was before the return filing date, so that counts as 2020, if that was the intent.

"Do I just go to Screen 24 and enter the traditional IRA contributions (nondeductible )?"

Yes. Later, there should be 5498, showing this did get converted. And a 1099-R for 2021, which should show it is for P = prior year 2020.

"What are the steps to a backdoor Roth?"

It's a complete rollover; you pointed out there is no basis to worry about.

"Backdoor" just means, was not deductible when contributed and "rolled over" right away = conversion, but it's a nontaxable event.

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S

SlosbergTaxAuthor

Level 2

I'm Sorry... Do I do anything other than enter the Trad IRA contributions on screen 24 at the top? Seems like 8606 should indicate that these contributions were made between 1/1/21 and 5/17/21. Don't I need that info on 8606 to populate? I need to know the steps to take on the computer to show this backdoor roth on the 2020 return. Thanks...

qbteachmt

Level 15

You have a nondeductible contribution to Trad IRA + conversion to Roth from an account where basis = 100% done so quickly that there also are no taxable earnings.

https://proconnect.intuit.com/community/retirement-tax-credits-and-deductions/help/conversion-of-a-traditional-ira-to-a-roth-ira/00/3581

https://proconnect.intuit.com/community/retirement-tax-credits-and-deductions/help/entering-a-basis-in-roth-or-traditional-ira/00/5844

Don't yell at us; we're volunteers