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Because of IRA income limits imposed, my wife and I put $5500 into an IRA and then once funds have settled, we do the conversion right to the Roth IRA. That's it. Other than that my IRA accounts remain at a zero balance. I do have employer 401k contributions but have not taken distribution on any of those.

Okay, it sounds like you are doing things correctly to take advantage of the 'back-door Roth' option. Are both the Traditional and the Roth at the same broker? What code does the 1099-R have in box 7? Assuming you are under age 59 1/2 (because you are only contributing $5500, which implies you are under 50), the code would probably be a 2 or a 1. If it's something other than a 2 and the accounts are at the same broker, I would suggest asking the broker to issue a correct 1099-R, with a 2 in box 7, so that it's documented to both your preparer and the IRS that a conversion was done. If the accounts are at different brokers, then it's up to you to provide documentation to your preparer so that s/he will account for the conversion, and to the IRS if they ever ask for it. (Although, if the conversion was done as a trustee to trustee transfer, and the receiving account was titled "mispoken - Roth IRA account", I would argue that the sending broker still should have issued the 1099-R with a 2 in box 7.)

If the code in box 7 is a 2, then your preparer should have accounted for the withdrawal as a conversion.

There is an 8606; under line 15 it lists a taxable amount;
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It seems like the amount should be entered into line 8; "Enter the amount you converted from traditional to Roth IRAs" Nothing on page 2 of the 8606 is entered.


What is the amount on line 15? Assuming that it is the $5500, line 8 has no entry and none of Part II (on page 2) is filled out, it sounds like the preparer did not account for the conversion. You need to go back and talk with the preparer about that and find out why not.

which brings me back to my question. If line 15 says taxable amount why am I being taxed on that amount when I've already paid taxes on that money as an employee wage. I never took a deduction for an IRA contribution.

Based on what you've said, there should not be a taxable amount on line 15. Again, you need to talk to the preparer about why there is a taxable amount on line 15, since you converted the entire amount.

Have you already signed the forms and/or the authorization for the preparer to e-file for you? If not, have the discussion before you sign, so that you don't have to amend a filed return.

If you have signed, and the preparer has already filed for you, there will need to be an amended return to get the correction made. And you should take this as a lesson to yourself that when someone else does your taxes (or if you do them yourself using software), you should never sign/file unless you have gone through every number and you are comfortable that they are correct.

AJ
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