I am a 401K participant and I opened an IRA for my wife as she is not working. I deducted the amount of IRA from my Taxes. 2 years later IRS denied the deduction and billed me for the taxes which i promptly paid. My question is since i paid the taxes on my IRA amount does it become automatically a Roth IRA . What should i do to fix this so that i do not end up paying taxes again upon withdrawal or conversion to roth.
You can convert that money into a Roth IRA, but you will have to pay tax on any growth that has occurred since then. I would suggest doing that as soon as possible. I can halp you with the Roth and conversion for no cost. Let me know.
You need to fill out a Roth conversion form provided by the firm where the IRA is held. Like the other advisor said, you'll owe tax on any growth that's occurred, and that tax will need to be claimed in whatever year you make the conversion.
In the future you need to do what is called a "backdoor Roth IRA" which is where you simply make a non-deductible IRA contribution each year and immediately thereafter convert the balance from the IRA into the Roth.
Always happy to clarify anything or answer any other questions you may have.
Best, Adam C. Harding, CFP email@example.com