In our last blog post, we showed that it's really easy to do a backdoor Roth IRA conversion, now we will discuss what you need to do at the time of tax filing to account for this conversion.
Form 8606
For the non-deductible contribution to the traditional IRA, you will need to include Form 8606 when you file your taxes. It’s a very simple form. If you use tax software, it will be included automatically if you answer the questions correctly.
1099-R
When you convert to the Roth IRA, you will receive the 1099-R form from your broker. Note, any conversion is accounted for on that conversion year's tax return, even the money could come from previous years' traditional IRA contributions.
To avoid unnecessary mess, you should try to do the contribution to traditional IRA and conversion to Roth IRA within the same year, even though there might be a small risk of IRS coming after you for the abuse of tax system.
Complications
If at the time of backdoor Roth IRA conversion, you have IRA money other than the $5,500 you contributed to the non-deductible traditional IRA account, there are complications and you need to deal with them first.
Form 8606
For the non-deductible contribution to the traditional IRA, you will need to include Form 8606 when you file your taxes. It’s a very simple form. If you use tax software, it will be included automatically if you answer the questions correctly.
1099-R
When you convert to the Roth IRA, you will receive the 1099-R form from your broker. Note, any conversion is accounted for on that conversion year's tax return, even the money could come from previous years' traditional IRA contributions.
To avoid unnecessary mess, you should try to do the contribution to traditional IRA and conversion to Roth IRA within the same year, even though there might be a small risk of IRS coming after you for the abuse of tax system.
Complications
If at the time of backdoor Roth IRA conversion, you have IRA money other than the $5,500 you contributed to the non-deductible traditional IRA account, there are complications and you need to deal with them first.
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