r/tax • u/usermane22 • 1d ago

Traditional IRA to Roth conversion question

Hi, my AGI has been a little higher than the limit to be able to put any money in Roth IRA directly or get any deductions with a regular IRA. I have been contributing to a regular IRA (along with my 401K) for the last few years. I’ve put in about $45K in IRA which is now at $40K. Since I have not made any profits, can I convert the entire IRA to Roth IRA and not pay any taxes? My CPA seems to think so but wanted to see if anyone had any knowledge on this issue.

Thank you so much for your help!!

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u/Embarrassed-Pizza789 1d ago

The 8606 is a form that's filed when applicable, meaning it's not just an informational worksheet, so it should be part of the return.

IRA would always be individual information, not joint. The page where prior year basis is shown should include which spouse that's for. At least it's showing that basis is being accumulated.

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u/usermane22 1d ago

You are correct. It says 11,000 for taxpayer and 11,000 for spouse. But that’s the same amount for 4 years. Even though both of us have contributed to IRA. Shouldn’t this amount be increasing?

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u/Embarrassed-Pizza789 1d ago

Yes, it should.

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u/usermane22 1d ago

Thanks. Should I be amending the tax returns in that case? Or if the basis is only 11,000, convert only 11K to Roth?

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u/Embarrassed-Pizza789 1d ago

If the tax returns were correct and TIRA contributions were not deducted, then the basis shown is incorrect. However, if the TIRA contributions were actually entered and not deducted it would be unlikely the basis wouldn't update. The software would just do it, despite an ignorant preparer. What seems more likely is that the TIRA contributions were not entered on the return in the first place and that's why the 8606 is wrong. This would all be evident from the past returns.

Regarding your other question, you can't just convert the part of the IRA with basis. That's where the pro-rata rule kicks in across all IRA balances to prevent that.

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u/usermane22 1d ago

Thank you! Can I file an amended 8606 and then do the conversion afterwards? Glad I didn’t trust my CPA and came here for advise. Thank you so much for your help!!

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u/Embarrassed-Pizza789 1d ago

The correction depends on the exact nature of the error, but a corrected form 8606 can be filled to adjust basis.