When to file Form 8606 for 2023 IRA contribution converted to Roth in 2024?

You'll actually need to file Form 8606 for BOTH 2023 and 2024 tax years, but for different parts of the transaction. For your 2023 tax return (filing now in 2024): You'll need to file Form 8606 to report your non-deductible Traditional IRA contribution for tax year 2023, even though you physically made the contribution in January 2024. This establishes your basis in the Traditional IRA. For your 2024 tax return (filing next year): You'll need to file Form 8606 again to report the conversion from Traditional to Roth that occurred in January 2024. This is when you'll report the actual conversion transaction. The key is that contributions are reported based on which tax year they're designated for, while conversions are reported in the tax year when they actually occur.

After struggling with this exact situation last year, I found using taxr.ai (https://taxr.ai) incredibly helpful for figuring out my backdoor Roth reporting. I uploaded my 1099-R from my custodian and it automatically determined I needed to file Form 8606 for both years - one for the contribution and one for the conversion exactly like the previous commenter mentioned. The tool also explained how the basis tracking works between tax years, which was super helpful since my situation was complicated by having some existing IRA funds. It saved me from making a costly mistake on my pro-rata calculations that would have resulted in double taxation.

I was skeptical about using taxr.ai for my complicated IRA situation, but I finally tried it after seeing it recommended here. It literally saved me thousands in taxes! I had done backdoor Roth conversions for three years without properly tracking my basis on Form 8606, and I was about to pay taxes AGAIN on money that should have been tax-free. The system flagged that I had been doing my reporting wrong and showed me exactly how to fix it with amended returns. It even explained exactly which lines on Form 8606 I had been completing incorrectly. My tax preparer had completely missed this for years! For anyone doing backdoor Roth conversions with multiple IRAs, it's seriously worth checking out. Wish I'd known about it sooner.

Has anyone else struggled to get through to the IRS to ask about Form 8606 reporting? I've been trying for WEEKS to get clarification on my backdoor Roth situation, but I can never get through their phone system. I finally used Claimyr (https://claimyr.com) after seeing it recommended here, and they actually got me connected to an IRS agent in about 15 minutes! You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent confirmed exactly what the first commenter said - I needed to file 8606 for my contribution year to establish basis, then file again the following year for the conversion. They also helped me understand how to handle the small amount of earnings that accumulated before I did the conversion.

I was extremely skeptical about Claimyr actually being able to get through to the IRS when I couldn't after trying for days. But with my tax deadline approaching and confusion about my backdoor Roth reporting, I gave it a shot. I'm shocked to report it actually worked! Got connected to an IRS retirement specialist in about 20 minutes who walked me through exactly how to report my backdoor Roth contributions across tax years. The agent confirmed I needed Form 8606 for both years - 2023 to report the non-deductible contribution and 2024 to report the conversion. Saved me hours of frustration and potentially filing incorrectly. Sometimes you have to admit when you're wrong, and I was definitely wrong about this service!

Just wanted to add - make sure you keep really good records of your Form 8606 filings every year! I lost track of my non-deductible contributions from previous years and now I'm struggling to prove my basis to avoid double taxation. The IRS puts the burden on you to track your cumulative non-deductible contributions over time. Save copies of ALL your 8606 forms indefinitely. I learned this the hard way and am now paying taxes on money that should have been tax-free because I can't prove my basis.

Quick tip for anyone doing backdoor Roth conversions: Convert IMMEDIATELY after contributing to minimize any gains in the traditional IRA. I literally do the conversion the same day or next day after the contribution. The reason is that any earnings that happen between contribution and conversion are taxable in the year of conversion. By converting immediately, you'll have minimal or zero earnings to report, making your tax situation much simpler.

One thing to keep in mind when filing your 2023 Form 8606 is that you'll need to report your contribution on Line 1 (nondeductible contributions for 2023) and Line 14 (your total basis in traditional IRAs). Since this is your first backdoor Roth and you had no prior IRA balance, your basis will simply be the $6,500 you contributed. When you file your 2024 return next year, you'll report the conversion on Part II of Form 8606. The good news is that since you converted immediately after contributing, you should have little to no taxable income from the conversion - just make sure to report any small earnings that may have occurred between contribution and conversion. Also, double-check that your IRA custodian sends you the correct tax forms. You should receive a Form 5498 showing your 2023 contribution and a Form 1099-R showing your 2024 conversion. Keep these with your tax records since they support your Form 8606 filings.