1040-US: Data entry for client who received a distribution from a traditional IRA and also made a nondeductible contribution in the prior-year to a traditional IRA in the current year

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Question

I have a client who received a distribution from a traditional IRA and also made a nondeductible 2021 contribution to a traditional IRA in 2022. How do I enter this in order to have Form 8606 calculate correctly?

Answer

On the 1099R screen, enter the total distribution amount in the Gross distribution and Taxable amount fields. Enter the applicable distribution code in the Distributions code field, and enter X in the IRA/SEP/SIMPLE field.

On the IRA screen, enter amounts in the following fields: Traditional IRA contribution, Designated nondeductible contributions, Traditional IRA basis, and Designated nondeductible contribution made in 2022 for 2021.

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