IRA to Roth Conversion Taxable income

I opened an IRA in 2016 funded with aftertax dollars of $6,500. I converted the entire account/funds of $6,050 (loss of $450) to an existing Roth IRA. We did our 2018 Taxes using Quicken TurboTAX and it never asked if or how much of the funds for conversion were after tax dollars. The entire conversion of $6050 was counted as income and we paid tax on it. I believe it should have 100% converted to our Roth IRA without being considered income. Am I correct? If so- I find NO PLACE on the tax return where to indicate this – can you direct me to the form/line item where is it found to report the %or $ amount on the tax return? Also – is there anyplace I could take a loss of the $450 on the taxes? We didn’t sell the stock it was simply journaled from the IRA to the ROTH and the stock price was less on that day – so how is that handled on the tax return – if at all.



This response assumes that this IRA account is your ONLY non Roth IRA. You should have reported the ND contribution in 2016 on Form 8606. Form 8606 on your 2018 return should have reported the conversion in Part II. It should be non taxable, so you will have to amend that return to attach a correct 8606. Turbotax should have asked if you had any ND contributions in your IRA (also known as basis), but you must have missed that. Unfortunately, the 450 of remaining basis will be lost for future use according to the 8606 Inst because your 2018 8606 will not have a figure on line 14 because you will not be filling out Part I. 

Thank you for responding. I have tried to follow your very clear and concise response. Unfortunately I am not able to understand this enough (I can’t even find Form 8606 for 2016  – I found 8880 only). Are you available for hire? If so, can you work with me to do this remotely? Or perhaps recommend someone in my area? Thank you.

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