IRA Contribution Confusion

cuzzoo312
cuzzoo312 Member Posts: 3 Newcomer
in Filing my taxes

I’m trying to make sure I’m reporting a Backdoor Roth IRA correctly and would appreciate some guidance.

Here’s my timeline:

2024 contribution

  • On April 9, 2025, I contributed $7,000 to my Traditional IRA at Charles Schwab.
  • I designated this contribution for tax year 2024.
  • When I filed my 2024 tax return, I answered “No” to the question asking whether I made any Traditional or Roth IRA contributions during 2024 because at the time of filing I had not made any contributions and did not plan to. I later decided to make a $7,000 Traditional IRA contribution for tax year 2024 on April 9, 2025 (before the contribution deadline), which is why Form 8606 was not included on my original 2024 return.

2025 conversion

  • On September 2, 2025, I converted the entire Traditional IRA balance ($7,001.40) to my Roth IRA.
  • My 1099-R for 2025 shows:
    • Box 1 (Gross distribution): $7,001.40
    • Box 2a (Taxable amount): $7,001.40
    • Box 7 code: 2

Additional context

  • The extra $1.40 is just earnings before conversion.
  • I had $0 in all Traditional/SEP/SIMPLE IRAs on Dec 31, 2025.

Questions

  1. Do I need to amend my 2024 return to add the $7,000 nondeductible Traditional IRA contribution and generate Form 8606?
  2. When filing my 2025 return, should I enter $7,000 as my prior-year IRA basis so only the $1.40 gets taxed?
  3. Is there anything else I need to do to correctly report this Backdoor Roth?

Thanks for any help — I want to make sure I handle the reporting correctly before I file.

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Answers

  • MatthewD
    MatthewD FreeTaxUSA Admin, FreeTaxUSA Agent Posts: 904 image
    Hi cuzzoo312,

    You've got the right idea on all three questions. Here's how to handle each one.

    Question 1 - Yes, amend your 2024 return. Since the $7,000 nondeductible Traditional IRA contribution wasn't reported on your original 2024 return, you'll need to file an amended return (Form 1040-X) to add it. This will generate Form 8606 for 2024, which establishes your $7,000 basis. Without that amended 8606, the IRS has no record of your basis, and you could end up being taxed on money that was already taxed.

    To amend your 2024 return in FreeTaxUSA, log into the 2024 software and go to the Final Steps tab to start the amendment. Then go to Deductions/Credits > IRA Contributions and answer "Yes" to the IRA contribution question. Enter $7,000 as a Traditional IRA contribution and work through the follow-up screens. Form 8606 will generate automatically.

    Question 2 - Yes, enter $7,000 as your prior-year basis on your 2025 return. When you enter the 1099-R and reach the screen asking about prior-year nondeductible IRA contributions, enter $7,000. This tells the software your basis, so only the $1.40 in earnings will be taxable. Your year-end IRA balance of $0 also helps here — it means the full basis is applied to the conversion with no proration.

    That covers it. Once you've amended 2024 and correctly entered the prior-year basis on your 2025 return, the reporting should be complete. This community article walks through the exact scenario where the contribution and conversion happen in different years, which is your situation:
    https://community.freetaxusa.com/kb/articles/172-reporting-a-backdoor-roth-conversion-after-december-31st-2024-and-later
  • cuzzoo312
    cuzzoo312 Member Posts: 3 Newcomer

    But doesn't it take weeks to amend a return. Will the generated Form 8606 for 2024 be instantly seen/available for my 2025 tax return?

    If not, how long would I need to wait for the amended 2024 return to take effect before I can continue filing my 2025 tax return?

  • kiarab
    kiarab FreeTaxUSA Agent Posts: 263 image
    Hello cuzzoo312,

    Yes, an amendment does take weeks. However, when you amend in our software, you should be able to see the 2024 form 8606 as soon as you are done with the return. You can then use that to report it on your 2025 return correctly.

    You also do not need to wait until your 2024 return is done amending. If the IRS does reach out and ask about your IRA basis, you can tell them that you amended your 2024 return to correctly reflect your situation.
  • cuzzoo312
    cuzzoo312 Member Posts: 3 Newcomer

    Hello Again @MatthewD @kiarab

    I’ve completed an amended 2024 return in FreeTaxUSA for a backdoor Roth situation, and it successfully generated Form 8606 along with the 1040-X and supporting documents. I’ve printed everything and I’m now at the point where I just need to decide whether to actually mail it to the IRS.

    For context, I made a $7,000 Traditional IRA contribution in April 2025 (for tax year 2024), which is nondeductible. My original 2024 return didn’t include Form 8606 because I hadn’t made the contribution at the time I filed.

    The amendment does not change my taxable income or tax liability — it only adds Form 8606 to document the contribution and establish basis.

    From what I understand:

    • The IRS already recognizes nondeductible IRA contributions based on reporting in the year of contribution
    • The key requirement is correctly carrying forward the $7,000 basis into my 2025 return
    • The amendment mainly serves to formally generate a 2024 Form 8606, but doesn’t change taxes owed

    So my question is: should I actually mail this amended return in, or is it unnecessary as long as I correctly report the $7,000 prior-year basis on my 2025 return (Enter your total basis in traditional IRAs for 2024 and earlier years:) ?

  • MatthewD
    MatthewD FreeTaxUSA Admin, FreeTaxUSA Agent Posts: 904 image
    Hi Cuzzoo312,

    To report the Roth correctly, you will need to mail in the amendment and include the Form 8606 so the IRS has a record of your conversion. It may not change the bottom line, but it does provide a proper paper trail of the Roth conversion.

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