Don’t report the contribution or distribution on Form 8606 or take a deduction for the contribution. However, you must include the amount of the distribution of the returned contributions you made in 2022 and any related earnings on your 2022 Form 1040, 1040-SR, or 1040-NR, line 4a. Also include the related earnings on your 2022 Form 1040, 1040-SR, or 1040-NR, line 4b.

Your main home was in California during the California Wildfires (DR-4610-CA), which began July 14, 2021; and the California Severe Winter Storms, Flooding, Landslides, and Mudslides (DR-4683-CA), which began December 27, 2022. You sustained economic losses because of each of those disasters. The end dates for making distributions for those disasters are June 26, 2023, and July 12, 2023, respectively. $22,000 was the maximum amount of qualified disaster distributions that could be made for the 2021 disaster. In between those distributions, in September 2022, a $5,500 distribution, unrelated to a qualified disaster, was made to you from your Roth IRA (that you did not roll over). You will report total distributions of $38,500 on Form 8606, line 19.

Inherited IRAs

A rollover between a SIMPLE IRA and a qualified retirement plan or an IRA (other than a SIMPLE IRA) can only take place after your first 2 years of participation in the SIMPLE IRA. If you aren’t required to file an income tax return but are required to file Form 8606, sign Form 8606 and send it to the IRS at the same time and place you would otherwise file Form 1040, 1040-SR, or 1040-NR. Be sure to include your address on page 1 of the form and your signature https://turbo-tax.org/turbo-tax-and-form-8606/ and the date on page 2 of the form. It’s easy to forget or overlook tax-planning moves and steps, but the opportunity isn’t gone forever if you neglect to take certain tax deductions. You can still claim deductions for annual contributions you made to your traditional individual retirement account (IRA) in previous years. The change in the RMDs age requirement from 72 to 73 applies only to individuals who turn 73 on or after January 1, 2023.

• We reviewed Shelly’s situation and identified the root of the problem.
• Backdoor Roth IRAs can be great for doctors and other high-income earners.
• Do not reduce line 6 by qualified disaster distribution repayments that were made in 2022 for qualified disaster distributions made in years before 2022.
• Seeking advice, Shelly reached out to us for help on how to approach her dilemma.

Use the Maximum Roth IRA Contribution Worksheet to figure the maximum amount you can contribute to a Roth IRA for 2022. If you are married filing jointly, complete the worksheet separately for you and your spouse. Next, Turbotax will ask you the same three questions about basis and amount in the IRA at the end of the previous year that it asked at the end of the conversion section. Then, if married, Turbotax will take you back through all the same questions about your spouse from the “repayment of a retirement distribution” on down. If you’re doing your Backdoor Roth IRA “correctly” in the “normal” way, your basis at the end of the prior year should be $0.

Why do I have to complete a CAPTCHA?

An individual who recharacterizes a Roth conversion or an IRA contribution must attach a letter (statement) to their tax return explaining the recharacterization. In this letter, you would, for instance, include how much is attributed to the contribution or conversion and the amount attributed to earnings (or indicate if there was a loss on the amount). https://turbo-tax.org/ The verbiage and information included in the statement are determined by whether the individual is recharacterizing from a traditional IRA to a Roth IRA or vice versa, or whether the individual is recharacterizing a Roth conversion. For examples of the information that should be included in the statement, see the instructions for filing Form 8606.

Be sure to include on line 19 all qualified disaster distributions made in 2022, even if they were later repaid, unless they fall under the 4th or 7th bullet above. Be sure to include on line 7 all qualified disaster distributions made in 2022, even if they were later repaid. Enter the total value of all your traditional, SEP, and SIMPLE IRAs as of December 31, 2022, plus any outstanding rollovers. A statement should be sent to you by January 31, 2023, showing the value of each IRA on December 31, 2022.

How are RMDs taxed?

You will report total distributions of $10,000 on Form 8606, line 7. You will enter $6,000 ($8,000 × $7,500/$10,000) on line 15b. You will also enter $6,000 on 2022 Form 8915-F (2022 disasters), line 18. In January 2022, a qualified disaster distribution was made to you from your traditional IRA in the amount of $22,000 that you reported on 2022 Form 8915-F (2021 disasters). In July 2022, an $11,000 distribution, unrelated to a qualified disaster, was made to you from your traditional IRA (that you did not roll over).

On November 21, 2022, you made a repayment of $10,000 to your traditional IRA. The value of all of your traditional, SEP, and SIMPLE IRAs as of December 31, 2022, was $50,000. You would enter $40,000 ($50,000 minus $10,000 repayment) on line 6.

The yearly, monthly, or weekly amounts you save in your account. Physicians and dentists work hard throughout their lives to take care of their families and experience a stress-free retirement. It’s possible that you could be charged a $50 penalty under the terms of Internal Revenue Code section 6693(b)(2) for failing to file a Form 8606 unless the failure is due to reasonable cause. Be sure to consider all your available options and the applicable fees and features of each before moving your retirement assets. Find members of Ed Slott’s Elite IRA Advisor GroupSM in your area.

For the latest information about developments related to 2022 Form 8606 and its instructions, such as legislation enacted after they were published, go to IRS.gov/Form8606. Incidentally, if you have screwed this up and you’re not getting what you want and you just want to start over, all you need to do is delete all the applicable forms in Forms mode. If you contributed too much to an IRA in the past, here’s where you report that. If you filled out the prior page right, this page should look about like this.

Basis in Roth IRA Conversions and Rollovers From Qualified Retirement Plans to Roth IRAs—Line 24

Note that you’ll see this question when you get to the contribution section too. Since you didn’t take the money out and buy a sailboat with it, click the first button. Since it was a Roth conversion, you click the second button in answer to the second question and hit continue.

Anyone who inherits an IRA may also be required to take RMDs. In general, nonspouse beneficiaries that inherit an IRA from someone that passed away in 2020 or later may be required to withdraw the entire account balance within 10 years. Spousal beneficiaries and certain eligible nonspouse beneficiaries may be permitted to take RMDs over their life expectancy. Having an estate plan is a critical component of responsible financial management. It ensures that your assets are distributed according to your … The final tax document you should receive is another Form 5498 reporting the conversion of funds into your Roth IRA.