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Get your taxes done using TurboTax
Thank you. I reviewed your file. Your contributions are nondeductible.
Please be aware, if you have a retirement plan at work and are over the income limit it will be nondeductible automatically. You only get a warning that your income is too high to deduct the traditional IRA contribution and then a screen saying $0 is deductible. TurboTax created Form 8606 for you and your spouse.
Please be aware, in your case the conversion is partly taxable because the pro-rata rule applies since you have pre-tax funds in your traditional/SEP/SIMPLE IRA. This means that with 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. Therefore, each distribution/conversion in the future will have a taxable and nontaxable part until the basis is all used.
The Backdoor Roth only works if your traditional/SEP/SIMPLE IRAs are empty. If you plan to use this strategy in the future 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.
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