Tax help needed - 1099-R (backdoor Roth conversion)

[liteningme]

In 2019 I made a non-deductible contribution to my IRA. In 2020 I converted those funds to Roth IRA. (Backdoor Roth conversion.) But on the 1099-R I received for the distribution from the traditional IRA, box 2a (Taxable amount) shows the full amount as taxable. I'm using TaxAct to file my taxes, and it's showing that distribution as taxable. But I already paid taxes on it in 2019 when I made the non-deductible IRA contribution. So I'm not sure what I'm doing wrong here -- I'm quite sure I shouldn't be paying taxes on those funds a second time. 

[archiethedragon]

You should only be paying taxes on the gains in the nondedutible IRA. You should change the taxable amount that be the gains in the IRA.

[liteningme]

May 10, 2021 10:18:44 GMT -5 archiethedragon said:

You should only be paying taxes on the gains in the nondedutible IRA. You should change the taxable amount that be the gains in the IRA.

Right. But the 1099-R I received put the full amount in box 2a (Taxable amount), not just the gains. So is it fraudulent if I put a different amount where it asks me that in TaxAct? Even though I know it's not taxable? 

[archiethedragon]

May 10, 2021 10:21:38 GMT -5 liteningme said:

May 10, 2021 10:18:44 GMT -5 archiethedragon said:

You should only be paying taxes on the gains in the nondedutible IRA. You should change the taxable amount that be the gains in the IRA.

Right. But the 1099-R I received put the full amount in box 2a (Taxable amount), not just the gains. So is it fraudulent if I put a different amount where it asks me that in TaxAct? Even though I know it's not taxable? 

Not fraudulent at all.  You are putting the correct info in!    There is a small possibility that the IRS questions why it doesn't match the 1099, in which case you would have to respond to them with the info you posted here. 

[savan]

I know you said you are using TaxAct but I bookmarked the TurboTax instructions back when I reported our conversion. It shows that the full amount is reported as taxable on the 1099-R but you indicate where you put it (Roth IRA) in TurboTax. I assume TaxAct has something similar.

thefinancebuff.com/how-to-report-backdoor-roth-in-turbotax.html

[mokes]

Did you file an 8606 on your 2019 tax return? (That's how you report your nondeductible contribution.)

So yes it's taxable, but you'll have the amount of your contribution as your basis and only owe taxes on any gains you're converting.

[cosmowife]

Do you have a traditional IRA or a simple IRA? I’m completely out of my element here but my tax preparer said that even if I try to backdoor into a Roth, it might be taxable due to the value of my other non-Roth retirement accounts. No idea what this really means but maybe you are dealing with something similar? It makes the backdoor seem way too complicated for me which is unfortunate because I was really relying on that as an option this year.