What is the Backdoor Roth IRA?
Many taxpayers are NOT eligible to contribute to a Roth IRA because their annual income is too high. However, they may be able to move money into a Roth IRA using the backdoor Roth IRA strategy.
IRS Form 8606 Nontaxable Distributions From an IRA
In general, distributions from a Traditional IRA are included in taxable income. However, a distribution may be nontaxable to the extent the taxpayer has basis in their Traditional IRA. This article and video covers an example Form 8606.
Roth IRA Contribution Limits for 2021 and 2022
The IRS imposes limits on how much an individual can contribute to their Roth IRA. Some taxpayers are completely ineligible from making Roth IRA contributions. This article and video discusses those limits for the 2021 and 2022 tax years.
How to File IRS Form 8606 for Non-Deductible IRA Contributions
Taxpayers that make traditional IRA contributions can generally deduct those contributions on their tax returns. However, in cases where the contribution is nondeductible, they should complete Form 8606.