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Backdoor Roth IRA - Help to verify everything is being entered properly (2024 TurboTax Deluxe - Desktop)
Hello, I am finishing up my tax return, and wanted help to verify that I am inputting the correct information for a Backdoor Roth IRA Conversion in my TurboTax desktop software. For background, I have had a Roth IRA opened for about 4 years now. The first two years I made non-tax-deductible contributions directly to the Roth, and in the previous two years I have opened a Trad IRA where I make my non-tax-deductible contributions to, and then convert those funds (Backdoor Roth Conversion) to my Roth. Since starting the backdoor Roth conversions, I have received 1099-R forms, which I have inputted into TurboTax. The following are the steps that I am going through to input this, and am just looking for confirmation that it is correct, or advice if I need to be doing something differently.
Federal Taxes > Wages & Income > Retirement Plans > IRA, 401(k), 1099-R:
- I auto-imported my Form 1099-R directly from my broker, and reviewed the information:
- Box 2b: Only "Taxable amount not determined" checked
- Box 7: 2-Early distribution, exception applies
- IRA/SEP/SIMPLE box is checked
- Good news: You don't owe extra tax on this money
- Is this 1099-R for a contribution that your employer made... > NO
- Did I inherit the IRA... > NO
- What did you do with the money... > I moved the money to another retirement account
- Choose which of the following applies > I did a combination of rolling over, converting, or cashing out the money
- Tell us how much $$ I moved to an IRA, 401(k), or other retirement account > Amount converted to a Roth IRA account (entered the full amount)
- Did I put this money in a HSA? > NO
- Was this a withdrawal due to a disaster? > NO
After this I continued to Deductions & Credits > Retirements and Investments > Trad & Roth IRA Contributions:
- I checked both boxes for "Traditional IRA" and "Roth IRA"
- Is this repayment of a retirement distribution? > NO
- Tell us how much you contributed (Traditional IRA) > Entered the total from the 1099-R form in the 2024 Traditional IRA contributions
- Did you change your mind? > NO
- Any excess IRA contributions before 2024? > NO
- Any nondeductible contributions to my (Traditional) IRA > NO
- This is one of the sections I wasn't fully sure of, because I converted to a Roth. Technically, I contributed to the Trad IRA, but then immediately converted it to a Roth. Should I instead be putting Yes in this section?
- Tell us the value of all your Trad IRA accounts > $0 (because I immediately convert all contributions to my Roth)
- Did I make Roth IRA Contributions for 2024? > NO (because they were conversions?)
- Track Roth basis? > YES
- Withdraw from Roth before 2024? > NO
- Enter prior year Roth contributions > entered total of direct contributions from first two years of account
- Tell us the years > checked the years that I converted a Trad IRA to a Roth IRA
- Entered Conversions > Entered the amount I converted from Trad IRA to Roth IRA for the selected years
- Adjust Roth IRA due to divorce? > NO
- Any excess Roth contributions? > NO
- Income too high to deduct an IRA contribution
- Your IRA Deduction Summary > $0
After this, I double checked how it filled out my Form 8606, and it looks as follows for key inputs:
- Box 1 - Nondeductible contributions to Trad IRAs: full amount from 1099-R that I converted
- Box 2 - Total basis in Trad IRAs: $0
- Box 3 - Add lines 1 and 2: Full amount from Box 1
- Box 16 - Net amount converted from Trad to Roth: Full amount from Box 1
- Box 17 - Basis in the amount on line 16: Full amount from Box 1
- Box 18 - Taxable amount: $0
Lastly, in the IRA Info Worksheet, my basis and value for Traditional IRAs is $0, and my basis (contribution and conversion history) for Roth IRA is correctly broken down between direct contributions and conversions as of 12/31/2024.
I think I have finally done this correctly, but just wanted confirmation from someone who has done this before. Thanks in advance for any help!