Backdoor Roth IRA Conversion

I followed the instructions for entering a backdoor Roth IRA conversion and it worked for me, but did not work when I entered my Spouses information.  I did it the exact same way but Turbotax is showing my spouses disbursement as taxable instead of non taxable.  How do I fix this?

IsabellaG
Expert Alumni

Retirement tax questions

Check your wife's entries. Did she have any other traditional IRA's from 2017 or any value in Traditional IRA's on 12/31/2018? Did you enter her IRA contribution as a nondeductible contribution first before handling the conversion? 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

Retirement tax questions

No other IRAs. Yes, the non-deductable IRA contribution was entered first.

IsabellaG
Expert Alumni

Retirement tax questions

The only thing I can say if yours went through correctly is that you may have missed one of the screens. If your scenarios were identical, they should both be handled the same way. I'd recommend deleting her contribution and the distribution and starting them over from scratch. If that doesn't work, respond back here with the specifics of both of your conversions, and I'll run them through my program. Also, please specify what version of TurboTax you are using.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

Retirement tax questions

It doesn't make a difference if I change my spouse's IRA from deductable to nondeductable. 

Retirement tax questions

I have deleted and re-entered several times now.   I am using TurboTax Deluxe version 2018.31.20.00.02

Retirement tax questions

Neither me or my spouse have an existing IRA.  We each opened a traditional account in July this year and contributed the maximum allowed.  Then, we each converted the money to newly opened Roth Accounts.  

IsabellaG
Expert Alumni

Retirement tax questions

Is your Modified Adjusted Gross Income between 189,000-199,000? And are you each covered by an employer retirement plan? 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

Retirement tax questions

Modified adjusted gross is less. Spouse not covered by an employer retirement plan. 

IsabellaG
Expert Alumni

Retirement tax questions

If your MAGI was less than $189,000, both of you could contribute directly to a Roth IRA without having to do a back door conversion. However, if your MAGI was $121,000 or more you couldn't take a deduction to a Traditional IRA because you were covered by an employer plan.  Your spouse, on the other hand, could take a deduction for a contribution to a Traditional IRA because he/she wasn't covered by an employer plan.

 

If you went through TurboTax to do a backdoor Roth, you could do it, because your Traditional IRA Contribution was not deductible. But if you tried it for your spouse, unless you checked to make his/her contribution nondeductible, you wouldn't be able to make the distribution nontaxable.  See the screenshot for the screen where you can designate the spouse's contribution as nondeductible.

 

 

That's what I believe is going on. If this isn't your situation, please respond with some numbers that I can run through TurboTax as a test.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

Retirement tax questions

That is the problem. Thank you very much for your help. 

Retirement tax questions

This is the situation. Thank you very much for your help! 

View solution in original post

IsabellaG
Expert Alumni

Retirement tax questions

I'm so glad! You are welcome!

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"