After tax IRA conversion to Roth IRA

[Fisher]

I am confused as to how to complete Form 8606. I have no previous IRAs and do not qualify for a Roth IRA contribution. However, I made a non-deductible IRA contribution of $5,000 for 2011. Shortly thereafter i converted $5,020 it to a Roth IRA. I know $20 is taxable and seems as though in Part 2: #16 on the form should be $5,020, #17 should be $5,000 and #18 being the $20. Do I even need to complete Part 1? If so, it just doesn't seem to work out following the instructions. What am I missing?

[ETA Consulting LLC]

You'd have to follow the form (line-by-line). That's not being sarcastic, but realistic. Say for instance you deposited the funds in 2011 and made the coversion in 2012. Then, your Form 8606 would only reflect the deposit made for 2011. The conversion would be reflected on the 2012 Form 8606; and that would amount to less after-tax being converted should you make an additional deposted before the end of 2012.

However, if you made the deposit and conversion during 2011, then the form would create the basis and eliminate the basis on the same form. Remember, the year of conversion is based on the date the conversion was actually done. You don't get a window.

I am not sure if this helps, as I am not entirely sure of the series of events.

Good Luck!

[mbozek]

I am confused as to how to complete Form 8606. I have no previous IRAs and do not qualify for a Roth IRA contribution. However, I made a non-deductible IRA contribution of $5,000 for 2011. Shortly thereafter i converted $5,020 it to a Roth IRA. I know $20 is taxable and seems as though in Part 2: #16 on the form should be $5,020, #17 should be $5,000 and #18 being the $20. Do I even need to complete Part 1? If so, it just doesn't seem to work out following the instructions. What am I missing?

You need enter amounts in each line that applies. As noted different answers will be generated depending on the year in which the contribution was actually made to the IRA.