Out of curiosity, I posted same text to CHAT GPT & was somewhat amazed by the reply. Bottom line is the question is still not answered, but isn't the reply amazing?
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"It seems like you're encountering some confusion in handling the backdoor Roth IRA conversion in TurboTax. Let's break down the process and address the issues you're facing:
- Entering the Traditional IRA contribution: You correctly entered the $7500 contribution to the Traditional IRA.
- Performing the Roth conversion: You correctly converted the entire $7500 from the Traditional IRA to the Roth IRA.
- Handling the tax implications: Since the contribution to the Traditional IRA was made with after-tax income and you converted it to a Roth IRA in the same tax year, there should be no tax owed on the conversion. This is because you're essentially moving money from a taxable account (Traditional IRA) to a tax-free account (Roth IRA).
Now, let's address the specific issues you're encountering:
- TurboTax error regarding taxable amount: If TurboTax throws an error when you enter $0 as the taxable amount on line 2a of Form 1099-R, it might be due to the software expecting some value there. Since your contribution was made with after-tax income, the taxable amount should indeed be $0. However, TurboTax might not handle this situation perfectly.
- Audit errors: The audit errors you're encountering seem to be a result of the discrepancy between the taxable amount and the conversion amount. TurboTax is expecting some taxable amount, but in your case, there shouldn't be any.
- Missing Form 5498: Although the credit union says you'll receive Form 5498 in May, it's advisable to wait for it and ensure all the information is correctly reported in TurboTax once you receive it.
Given these issues, you might need to override TurboTax's suggestions in this specific scenario to accurately reflect that the entire amount was contributed with after-tax dollars and thus no tax is owed on the conversion. However, if you're uncomfortable doing this, it might be best to consult with a tax professional who can guide you through the process or consider using a different tax software that may handle this scenario more smoothly"
