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Backdoor Roth Plus a Recharacterization – Basic Scenario (2024 and later)
Contributed by: RachelR, FreeTaxUSA Agent, Tax Pro and Henry, FreeTaxUSA Agent, Tax Pro This article applies to 2024 and later years Here are the steps for entering a backdoor Roth including a recharacterization. First: Add the 1099-R for the Roth to traditional recharacterization When your recharacterization from…
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Backdoor Roth Plus a Recharacterization – Recharacterization Happens After December 31st (2024 and later)
Contributed by: RachelR, FreeTaxUSA Agent, Tax Pro and Henry, FreeTaxUSA Agent, Tax Pro This article applies to 2024 and later years Sometimes you don’t complete the recharacterization until the tax year is already over. Here’s an example: You made a Roth IRA contribution for 2024 during the 2024 tax year. You don’t…
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Reporting a Backdoor Roth – Conversion After December 31st (2024 and later)
Contributed by: RachelR, FreeTaxUSA Agent, Tax Pro and Henry, FreeTaxUSA Agent, Tax Pro This article applies to 2024 and later. The basic example assumed both the traditional IRA contribution and the Roth conversion step happened in the same year (for example, both events happened during 2024, for the 2024 tax year).…
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Reporting a Backdoor Roth – Basic Scenario (2024 and later)
Contributed by: RachelR, FreeTaxUSA Agent, Tax Pro and Henry, FreeTaxUSA Agent, Tax Pro This article applies to 2024 and later. The basic reporting of a backdoor Roth involves the following scenario: You contribute to a traditional IRA before the end of the tax year (December 31st). You either: Have too much income for the…
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Can I deduct the sales tax paid on a large purchase?
Contributed by: WrenD, FreeTaxUSA Agent, Tax Pro Big purchases like cars, boats, or RVs can be super exciting, but did you know they might also come with some cool tax benefits? Imagine turning that big buy into a smart money move by deducting the state sales tax on your federal tax return. This article will show you how…
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How do you allocate premiums on Form 1095-A if you have a policy shared by a parent and a non-dependent child?
Contributed by: Henry, FreeTaxUSA Agent, Tax Pro The Health Insurance Marketplace allows parents to include a non-dependent child under age 26 in their household. This means the child can be added to the parent’s policy even if they aren’t claimed as a dependent on the tax return. In this situation, Form 1095-A must be…
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What to do if I never filled out Form 8606 for past nondeductible IRA contributions
Contributed by: Henry, FreeTaxUSA Agent, Tax Pro and KristineS, FreeTaxUSA Agent, Tax Pro After-tax (nondeductible) contributions to your traditional IRAs are tracked and reported on Form 8606. These contributions give you basis in your IRAs. Keeping accurate records of your basis is important because when you take…
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What is the pro rata rule and why do I need to know it?
Contributed by: CoryF, FreeTaxUSA Agent, Tax Pro Wait a second, I have taxable income on my conversion to a Roth IRA. I thought if I put in enough nondeductible IRA contributions there would be no taxable income, but I am still seeing taxable income on my Roth IRA conversion. What is happening here? Congratulations, you…
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Why would I fill out the injured spouse allocation form?
Contributed by PhillipB, FreeTaxUSA Agent, Tax Pro There are certain government and legal debts that can be garnished from a federal income tax refund. These debts include: Past due federal or state income tax Student loans in default Unpaid back child support State unemployment compensation Other federal non-tax debt…
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What can I do if I have unreimbursed employee business expenses?
Contributed by: PhillipB, FreeTaxUSA Agent, Tax Pro Since the Tax Cuts and Jobs Act (TCJA) went into effect in 2018, employees can no longer deduct unreimbursed work expenses as miscellaneous itemized deductions on their federal income tax return. Currently, there are four professions that are eligible for deducting their…