Line 1 of 8606 empty

protossor

I made $7000 non-deductible contributions to my traditional IRA account for year 2024 and $6500 for year 2023. The 2023 contribution was done in 2024 before April 15. The immediately I converted all of it to Roth IRA. Because both contributions and conversion were made in 2024, I got a 1099-R form from my bank with the gross income of 13502 (2 dollars should be the interest earned in the meantime).

After I filled out 1099-R and answered the follow up questions, I see the generated 8606 form has the following

• Line 1: empty
• Line 2: 6500
• Line 3: 6500

Because of this, the taxable income becomes $7002, which is wrong as that $7000 that I contributed is after-tax money.

I can't figure out how to make freetaxusa put the correct $7000 for line 1. Any idea how to fix this?

DaveT

You need to make sure you are properly answering the questions related to the IRA contributions. There is a question which asks how much of the conttibution you are deducting.

protossor

Thanks Dave! In IRA Contributions section I selected the following

• Did you make any traditional or Roth IRA contributions during 2024?
  Yes
• Did you have any excess IRA contributions in 2023?
  No
• Enter any traditional IRA contributions you made during 2024:
  $7000
• Enter any Roth IRA contributions you made during 2024:
  $0
• Did you switch or recharacterize any IRA contributions to another type of IRA?
  No (IIUC Traditional to Roth conversion is not a recharacterization)
• Did you make a repayment of a special distribution?
  No
• Did you withdraw any traditional IRA contributions by the tax filing due date?
  No
• Enter any 2024 traditional IRA contributions you withdrew:
  $7000 (IIUC I withdrew this amount and put it back to Roth)

With all of the above answered and then I go to the final page to review my tax return, in there I have in my 8606

• Line 1: blank
• Line 2: 6500
• Line 3: 6500 (IIUC the answer here should be yes and this should be blank. But it's not)
• Line 4: blank

Is there anything I did wrong above? Thank you again!

DaveT

https://community.freetaxusa.com/discussion/comment/4707#Comment_4707

Looks like FreeTaxUSA automatically calculates whether an IRA contribution is deductible or nondeductible based on your income. However, on the W-2 screen, there is a checkbox that asks if you are covered by a retirement plan at work. If you check that box and your income is above the threshold for being able to deduct an IRA contribution, then the IRA contribution will be treated as nondeductible and be shown on Form 8606.

protossor

Thanks Dave! On my W2 I indeed have Box 13 Retirement Plan checked. And my income is also above the threshold for being able to deduct an IRA contribution.

protossor

Any idea how to make progress on this? Or is this a bug of FreeTaxUSA?

protossor

Ah actually looks like changing the following answer fixed it

• Enter any 2024 traditional IRA contributions you withdrew:
  $7000 → 0