Due to the fact I make more than the MAGI (married, filing jointly), I am trying to claim backdoor Roth (i.e, conversion from Traditional IRA to Roth IRA). I did in fact contribute $6,000 to Traditional IRA in January 2021 and subsequently converted it to a Roth IRA. Here are the steps I'm taking to do the IRA conversion in Turbotax:
- Sign in to your TurboTax account
- Open (continue) your return
- Deductions & Credits > Click Edit next to 'Traditional and Roth IRA Contributions'
- Select the Jump to link in the search results
- Select Roth IRA and Continue
- Answer NO on the screen, Is This a Repayment of a Retirement Distribution?
- For total 2021 Traditional IRA I'm entering $6,000 as on the screen, Tell Us How Much You Contributed?
I'm entering $6,000 on the screen, Tell Us How Much You Transferred (from traditional to Roth)
- If you would like guidance for this section, select Fill in Template. *Particulars were entered.*
At the end of all these steps, I'm still assessed a $360 penalty for contributing to the Roth IRA when in fact I am trying to do the backdoor Roth conversion. Makes no sense because according to Turbotax help and Investopedia, the following guidelines/limits don’t apply to backdoor Roth IRA conversions: Roth IRA Income Limits: For 2021, if your MAGI is $140,000 or higher and you’re single, or $208,000 or higher and you’re married filing jointly or a qualifying widow or widower, then you can’t contribute to a traditional Roth IRA.11
