Backdoor Roth - Entering in Turbotax (2024)

Hello,

I tried to follow the instructions from last year to enter a backdoor Roth but Turbotax is reporting the full amount as taxable.

Thank you for your help,

D

‎February 3, 20248:03 PM

If the full amount is being taxed and the conversion took place for a 2023 contribution, be sure that you have entered the 2023 contribution to the Traditional IRA and made it non-deductible. That will put a basis in the system so that the distribution and subsequent conversion would not be taxed.

If your Form 1099-R is reporting a 2022 Traditional IRA contribution that was converted to a Roth IRA in 2023, there is further information in the instructions about how to handle that situation if it is being taxed.

Here is a link to the current instructions:

How do I enter a backdoor Roth IRA conversion?

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If the full amount is being taxed and the conversion took place for a 2023 contribution, be sure that you have entered the 2023 contribution to the Traditional IRA and made it non-deductible. That will put a basis in the system so that the distribution and subsequent conversion would not be taxed.

If your Form 1099-R is reporting a 2022 Traditional IRA contribution that was converted to a Roth IRA in 2023, there is further information in the instructions about how to handle that situation if it is being taxed.

Here is a link to the current instructions:

How do I enter a backdoor Roth IRA conversion?

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Hi Annette,

Thank you for your quick response. I think my problem is marking the IRA contribution as deductible. Because my income is above the threshold, software just calls it non deductible but did not give me a choice of making it non deductible. Please let me know how to make it as non deductible. I went through the questions a few times and am getting to the same result.

Thanking you in advance for helping me,

David

Thank you, Annette. I was able to resolve it and it works. Thank you!!!

Please let me know what I can do?

So far, I have been able to successfully follow these instructions only two times. Each time I have made a mistake and needed to correct it and I have not been able to get back to a state where I don't get the message that we have too much income. This is further complicated by the fact that both my spouse and I made IRA deductions that we converted to Roths. Even if one is correct, I have to go through the questions for both of us each time, thereby causing the correct one to become incorrect and the new one not be correct at all.

Please let me know what I need to do to return TurboTax IRA information to an initial state. I have tried deleting everything related to the IRAs, quitting TurboTax, restarting my computer. The only thing that seemed to work was deleting everything, and letting my computer sit overnight. Then I made a mistake, and it is a mess again.

I would really appreciate any insight you can provide.

Hi,

What I figured out is that this was the first year we had money in a regular IRA. Many things change as a result, including how much money (if any) is available for transferring through the backdoor Roth. I figured this out when I deleted the regular IRA contributions. Then everything worked for me as it did in previous years, and I realized that the IRA contribution was the difference.

I hope this helps you to figure out your issue. I do think that having to go through the questions every time makes it difficult to understand how it all works.

Good luck!

If you got the message that it is nondeductible because of your income limits and a retirement plan at work then you have the first step done correctly. You should have a basis on line 1 of Form 8606.

To confirm, you entered the step 2, Form 1099-R for the conversion but line 4b show the amount as taxable? Please see How do I enter a backdoor Roth IRA conversion? for detailed instructions.

Did you have any pre-tax funds in your traditional/SEP/SIMPLE IRAs on December 31, 2023? If yes then the pro-rata rule applies. This means that with each distribution/ conversion you will have a taxable and nontaxable part.

The Backdoor Roth only works if your traditional/SEP/SIMPLE IRAs are empty. If you have pre-tax funds in your traditional/SEP/SIMPLE IRAs then you might want to think about a reverse rollover where you rollover IRA money to a company plan, like a 401(k). Only pre-tax funds can be rolled from an IRA to a company plan. Therefore, you would isolate the basis and could start the Backdoor Roth procedure fresh. But it only works if your employer allows it, not all plans do.

If this doesn't solve your issue then please provide more details about your situation.

@lndwalton

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I don't have a broad understanding Roth Backdoor conversions; I only know my own situation. What happened to me was that I had taken a distribution from my regular IRA, so that limited my ability to do the backdoor conversion. I finally figured out what was happening when I deleted my regular IRA distribution (which I had not had in previous years). Then I was able to go through the TurboTax screens. (In the end, I had to enter the regular IRA data, so I did not have a backdoor conversion.) Perhaps you have some other situation that prevents TurboTax from seeing the backdoor conversion as nontaxable.

I wish I could be more help.

Good luck!

Hi,

Hi again,

I did have one more idea, which your experience may confirm. My idea is that the auto-save feature of TurboTax does not update quickly. When I did get it to work, it was after I had given up for the day, and tried again the next day. Everything worked the next day, even though I was doing everything exactly the same way each time.

Just a thought...