Turbotax is populating From 8606 Incorrectly

[Sharon2938]

I noticed that TurboTax is not populating any values in part 1 of the form 8606 and only showing $7000 on line 16 and 18 of part 2, making $7000 taxable income when it was actually a backdoor Roth IRA conversion. I tried multiple things like re-uploading the form 1099-R, watched multiple youtube videos and followed the correct steps but though, at the end, it shows "Your IRA Deduction : $0", it doesn't populate anything on line 1,3,5,8,13. To double check if I am doing something wrong, I entered the same data in FreeTaxUSA and it is generating the form 8606 correctly. That confirms it that there is a bug in TurboTax. I talked to their support team, and they couldnt help me and want me to buy expert review service. Like really!!! PLEASE FIX THE BUG!!! and dont charge extra for it! 

[DanaB27]

Did you have a prior year basis from 2023? If yes, then please see Why am I unable to report my 2023 for 8606 basis?

If you only made a nondeductible traditional IRA contribution for 2024 and don't show an entry on line 1 of Form 8606 then it would be helpful to have a TurboTax ".tax2024" file that is experiencing this issue. You can send us a “diagnostic” file that has your “numbers” but not your personal information. If you would like to do this, here are the instructions for TurboTax Online: 

1. From the left menu select Tax Tools. 
2. Then select Tools below Tax Tools. 
3. A window will pop up which says Tools Center.  
4. On this screen, select Share my file with Agent. 
5. You will see a message explaining what the diagnostic copy is. Click okay through this screen and then you will get a Token number. 
6. Reply to this thread with your Token number and add @DanaB27 . This will allow us to open a copy of your return without seeing any personal information.  

The instructions for TurboTax Download: 

1. On your menu bar at the very top, click "Online"
2. Select "Send Tax File to Agent"  
3. Click "Send"
4. The pop-up will have a token number
5. Reply to this thread with your Token number and add @DanaB27 . This will allow us to open a copy of your return without seeing any personal information.  

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution.

[Sharon2938]

I appreciate you for responding. Here's the token number : 1280979 @DanaB27 

[DanaB27]

Thank you, I reviewed your return. You entered a recharacterization in the IRA contribution section. A conversion is not a recharacterization. Please, see the instructions below and remove the recharacterization with step 7.

To enter the nondeductible contribution to the traditional IRA:

1. Login to your TurboTax Account 
2. Click on "Search" on the top right and type “IRA contributions” 
3. Click on “Jump to IRA contributions"
4. Select “traditional IRA”
5. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
6. Enter the amount you contributed
7. On the "Tell us how much you transferred" screen remove the entry for the recharacterization
8. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contribution before this tax year.
9. Enter your basis in the Traditional IRA from your 2023 Form 8606 line 14 (if you had a basis in the prior year)
10. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (if you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible).

Please note lines 6 to 12 are empty on Form 8606 since TurboTax is using the Taxable IRA Distribution Worksheet to calculate the nontaxable part on line 13 as indicated by the *. It seems you had a pre-tax balance at the end of the year and therefore the pro-rata rule applies and each each distribution/ conversion you will have a taxable and nontaxable part. You can see the remaining basis on line 14 of Form 8606, this basis can be carried forward. 

To clarify, you made a traditional IRA contribution in 2024 for 2024 and then converted this amount right away in 2024? Did you have any other pre-tax funds in all of your traditional/SEP/SIMPLE IRA account?  Because if not then your balance at the end of the year should be $0. Please check your end of the year statement to verify your balance on December 31, 2024 and edit you entry if necessary (step 7 below).

1. Click on "Search" on the top right and type “1099-R”  
2. Click on “Jump to 1099-R”
3. Click "Continue" and enter the information from your 1099-R
4. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
5. On the "Review your 1099-R info" screen click "Continue"
6. Answer "Yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
7. Answer the questions about the basis from line 14 of your 2023 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

[Sharon2938]

Thank you for responding. I made the changes and now I am seeing the form getting populated correctly. However I have another question. I initially contributed $7000 into my traditional IRA thru Robinhood and then Robinhood did a 3% IRA match.  I converted the amount from trad. to roth IRA, but due to loss in value of the stocks at the time, the amount converted was $6390 and not $7000. So, how do I report this loss of $610?  Should I mention $7000 in line 1,3 & 5 and $6390 in line 13,16 and 17, and then line 14(your total basis in traditional IRAs for 2024) as $610. Is this correct? Though the 1099-R form I received from Robinhood, only shows $6390 in box 1 (gross distribution) and 2a (taxable amount). Also, $210 I received from Robinhood as IRA match, how do I report that in 8606? 

[DanaB27]

Yes, the entries on Form 8606 are correct and you will have the basis on line 14 of $610 that will be carried forward.

The $210 would be like earnings in the IRA. You only enter the $7,000 as the nondeductible traditional IRA contribution. Then the $6,390 as converted (I assume this included the $210) and you will have the $610 basis carried over to future years.

[lilong10]

Well, in my case, my contribution to Traditional IRA is $7000, and converted $7210 to Roth (with $210 Robinhood match).  What should I do to reflect the taxable $210 in my gross conversation? As for now this $210 doesn't seem to be reported anywhere... 
Thanks!

[fanfare]

your 1099-R says $7,000 but Robinhood gave you 210 then your IRA balance did not finish the year at zero and your conversion is not tax-free.

[lilong10]

Thanks for responding! 
I understand the $210 is taxable. Do you know how to enter it into Turbotax?
Thanks in advance!

[nanhtsai]

Hi, the total basis in the Form 8606 from 2023 is blank, and I need the information to file this year's taxes. 

My token number is 1297343.  @DanaB27

[DanaB27]

To clarify, you made a nondeductible Traditional IRA contribution for 2023 and then converted this in 2024? If yes but you do not show a basis on line 14 on your 2023 Form 8606 then you need to amend your return to enter the nondeductible Traditional IRA contribution. Please see How do I amend my federal tax return for a prior year?

On your 2023 return:

1. Click on "Search" on the top right and type “IRA contributions” 
2. Click on “Jump to IRA contributions"
3. Select “traditional IRA”
4. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
5. Enter the amount you contributed
6. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
7. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contribution before this tax year.
8. Enter your basis in the Traditional IRA from your 2023 Form 8606 line 14 (if you had a basis in the prior year)
9. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (if you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible).

On your 2024 return you will enter the basis from the 2023 Form 8606 line 14 after you enter the Form 1099-R:

1. Click on "Search" on the top right and type “1099-R”  
2. Click on “Jump to 1099-R”
3. Click "Continue" and enter the information from your 1099-R
4. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion" screen and choose “I converted some or all of it to a Roth IRA”
5. On the "Here's your 1099-R info" screen click "Continue"
6. Answer "Yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
7. Answer the questions about the basis from line 14 of your 2023 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

@nanhtsai