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Form 8606 Line 1 empty

scouse_s

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 2023 to Roth IRA but I recharacterized it in 2024. The immediately I converted all of it (both 2024 and recharacterized 2023 contribution) to Roth IRA. Because the conversion were made in 2024, I got a 1099-R form from my bank with the gross income of 14900 ($1400 is the gain). Below are the questions on the retirement information screen and my answers (in bold).

Prior Year IRA Contributions

Have you ever had a nondeductible traditional IRA contribution on any prior year tax return? Yes

Traditional IRA / SEP / SIMPLE Basis and Value

Based on the Form 8606 that you filed in 2023, your total basis for 2023 and earlier years is $6,500.
Enter your total basis, if any, in traditional IRAs (including SEP and SIMPLE) for 2023 and earlier years: $6500
Enter the value of all your traditional, traditional SEP, and traditional SIMPLE IRAs as of December 31, 2024, Don't include any amount rolled over or converted to a Roth IRA. Subtract any disaster distribution repayments and any treated as rollovers that you made in 2024. $0
Enter the amount, if any, of your contributions to a traditional IRA for 2024 that were actually made from January 1, 2025 through April 15, 2025: $0

In all the above questions, there is no line where I can enter the non-deductible contributions I made for 2024, i.e. $7000. Hence, form 8606 line 1 is coming out to be empty. Line 2 is $6500 and Line 3 is $6500.

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Comments

DaveT

https://community.freetaxusa.com/discussion/2252/form-8606-line-1-empty

If your AGI for 2024 did not exceed the income limits and other criteria for a deductible contribution, FreeTaxUSA will assume that the contribution was deducted.

scouse_s

Got it. Since I already made the non-deductible contribution for 2024, how do I enter it as my basis ?

DaveT

https://community.freetaxusa.com/discussion/comment/4868#Comment_4868

You may have intended to not take the deduction, but the software determines whether or not it applies. If you qualify for the deduction, the software automatically takes it.

scouse_s

So if I understand what you are saying, on form 8606, my taxable amount will be $(14900-6500) = $8400 since my basis for 2024 was not counted as non-deductible by the software. However, the software should deduct the $7000 automatically from my total taxable income. Where (which form) should I then see the $7000 amount as deduction? Do you see any issues filing as such?

DaveT

https://community.freetaxusa.com/discussion/comment/4871#Comment_4871

The $7,000 IRA deduction should appear on Schedule 1, Line 20 which carries over to the 1040, Line 10 (adjustments to income).

scouse_s

Thank you. I appreciate it. Two follow up questions-

1. I didn't enter any IRA deduction in the software, where would it find the $7000 amount ?

2. Since the a MFS filer, I am not eligible to make direct Roth contribution. Hence, I made the non-deductible contribution to trad IRA to do backdoor Roth conversion. So what does the IRA deduction imply to the IRS? And why would the software choose automatically?

MatthewD

Hi Scouse_s,

We have a number of excellent articles about Backdoor Roth conversions. Instead of trying to explain everything see the link and the articles. They have screen shots and instructions.