Doing a "backdoor Roth" in TurboTax is a 2-step pr...
PaulaM
Employee Tax Expert

Retirement tax questions

Doing a "backdoor Roth" in TurboTax is a 2-step process. Be certain to enter your basis before entering any 1099-R. Follow the steps below in the order given, for the desired outcome.

First, select in your open return, My Account>Tools>Topic Search. Type traditional IRA and GO. Enter the contribution to the Traditional IRA (TIRA) that you made. This is not a characterization. Select No on the page, Did You Change Your Mind? Depending on your income and if you have a retirement plan at work, TurboTax will either tell you that your contribution is not deductible or it will ask you "Do you want to make your IRA contributions nondeductible?" Select Yes.

Once TurboTax knows that your TIRA contributions are nondeductible (that is, you have a basis in your TIRA), then enter your 1099-R.  Select My Account>Tools>Topic Search. Type 1099r and GO. For a Roth conversion, the 1099-R usually has a Distribution Code 2 in Box 7. That means it is an early distribution but an exception applies so there is no penalty.

To check that the right results show, look at your 1040 form. Select My Account>Tools>View Tax Summary. Then select the gray Preview my 1040 from the top of your screen. There should be no entry on Line 32 for IRA deduction. The Box 1 amount from your 1099-R should appear on Line 15a of your 1040, but Line 15b should be zero.

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