2014 was first year for which I did back door roth ira conversion from a non-deductible traditional ira account, in the year 2015. I have no other IRA accounts or outstanding balances before this. I contributed $3280 in March 2015 and in a few days converted $3289 (the original contribution had some gain) to Roth IRA. So, on my 8606 for 2014, I had "0" basis. 2014 8606 was as below :
Line 1 : 3280
Line 2 : 0
Line 3 : 3280
Line 14 : 3280
Line 16 : 0
Line 17 : 0
Line 18 :0
So, all good for 2014 contribution and conversion. After the conversion, the balance in my non-dedc TIRA was "0". And, since all was after tax amount, I need to pay tax on only the gain of $9 in the duration between the contribution and conversion. Since the conversion was done in 2015, I am expecting to pay tax on the $9 gain in 2015.
Now, in 2015 August, I also contributed $2000 in a non-trad ira so that I can do a backdoor roth ira for the tax year 2015.This amount was $2035 on 31 Dec 2015 (had a $35 gain). I also contributed additional $1000 in a non-trad ira in March 2016. So, my total contribution to non-trad ira for 2015 was $3000. However in 2016 March, I re-characterized $1540 of this to Roth ira since I was able to (before reaching my roth ira contribution limit, based on AGI). The instructions for form 8606 state that any amount recharacterized from IRA 1 to IRA 2 should be considered as it belonged to IRA 2 to begin with. I also had the remainder of $1460 converted to Roth Ira as a backdoor conversion in March 2016 (the original $3000 minus the recharacterized $1540) since I was able to.
So, while filing my 2015 8606 form, what should I enter in Line 6 of the form 8606 ? Line 6 states " enter the value of your all of your traditional, SEP and SIMPLE IRAs as of December 31 (on the current year)".Here is how I was completing the form :
Line 1 : 1460
Line 2: 3280
Line 3 : 4740
Line 4 : 1460
Line 5 : 3280
Line 6 : 0
Line 7: 0
Line 8: 3289 (This is what I got on my 1099-R for 2015 as "taxable amount". And it says "Taxable amount not determined. Code 2 in box 7.)
Line 9: 3289
Line 10 : 0.997
Line 11 : 3280
Line 12 : 0
Line 13 : 3280
Line 14 : 1460
Line 15 : 0
Line 16 : 3289
Line 17 : 3280
Line 18 : 9
This aligns with the $9 gain which I need to be taxed on. However, my year end statement from Vanguard for 2015 shows the value of my non-trad ira account as $2035 at 31 Dec 2015 since I contributed the $2000 in Aug 2015. If I add $2035 on Line 6, it changes the calculation and shows a huge taxable amount on Line 18 (to about $1200) and also messes up the basis on line 14!
So, should I consider the $2035 in Line 6 ? I am thinking NOT, since it would consider as though I "over contributed" above my 2014 ira limit and hit me with a higher taxable amount, even though that is not the case.
Please help !
Line 1 : 3280
Line 2 : 0
Line 3 : 3280
Line 14 : 3280
Line 16 : 0
Line 17 : 0
Line 18 :0
So, all good for 2014 contribution and conversion. After the conversion, the balance in my non-dedc TIRA was "0". And, since all was after tax amount, I need to pay tax on only the gain of $9 in the duration between the contribution and conversion. Since the conversion was done in 2015, I am expecting to pay tax on the $9 gain in 2015.
Now, in 2015 August, I also contributed $2000 in a non-trad ira so that I can do a backdoor roth ira for the tax year 2015.This amount was $2035 on 31 Dec 2015 (had a $35 gain). I also contributed additional $1000 in a non-trad ira in March 2016. So, my total contribution to non-trad ira for 2015 was $3000. However in 2016 March, I re-characterized $1540 of this to Roth ira since I was able to (before reaching my roth ira contribution limit, based on AGI). The instructions for form 8606 state that any amount recharacterized from IRA 1 to IRA 2 should be considered as it belonged to IRA 2 to begin with. I also had the remainder of $1460 converted to Roth Ira as a backdoor conversion in March 2016 (the original $3000 minus the recharacterized $1540) since I was able to.
So, while filing my 2015 8606 form, what should I enter in Line 6 of the form 8606 ? Line 6 states " enter the value of your all of your traditional, SEP and SIMPLE IRAs as of December 31 (on the current year)".Here is how I was completing the form :
Line 1 : 1460
Line 2: 3280
Line 3 : 4740
Line 4 : 1460
Line 5 : 3280
Line 6 : 0
Line 7: 0
Line 8: 3289 (This is what I got on my 1099-R for 2015 as "taxable amount". And it says "Taxable amount not determined. Code 2 in box 7.)
Line 9: 3289
Line 10 : 0.997
Line 11 : 3280
Line 12 : 0
Line 13 : 3280
Line 14 : 1460
Line 15 : 0
Line 16 : 3289
Line 17 : 3280
Line 18 : 9
This aligns with the $9 gain which I need to be taxed on. However, my year end statement from Vanguard for 2015 shows the value of my non-trad ira account as $2035 at 31 Dec 2015 since I contributed the $2000 in Aug 2015. If I add $2035 on Line 6, it changes the calculation and shows a huge taxable amount on Line 18 (to about $1200) and also messes up the basis on line 14!
So, should I consider the $2035 in Line 6 ? I am thinking NOT, since it would consider as though I "over contributed" above my 2014 ira limit and hit me with a higher taxable amount, even though that is not the case.
Please help !