Doing a "backdoor Roth" in TurboTax is a 2-step process.
First, go to Federal Taxes > Deductions & Credits > I'll Choose What to Work On > Retirement and Investments > Traditional and Roth IRA Contributions. Enter the contribution to the Traditional IRA that you made. 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?"
Once TurboTax knows that your Trad IRA contributions are nondeductible (that is, you have a basis in your Trad IRA), then enter your 1099-R at Federal Taxes > Wages & Income > I'll Choose What to Work On > Retirement Plans and Social Security > IRA, 401(k), Pension Plan Withdrawals (1099-R). 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. 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.
(If you are doing this in the current tax year, you can not adjust and it's reportable on a lag (A roth conversion done after year end prior to 4/15) you may need to file a form 8606 for the prior TAX YEAR basis, if you are doing the conversion in the current year for prior year). Send in the completed 8606 showing the NON-Deductible amounts so it will catch up to your current Tax Return. (mail in)
Then prepare the current return, enter the 1099-R, within the questions to be answered, Do you kept track of Non-Deductible Contributions to Traditional IRA, Answer YES .. Now Form 8606 will show the NON-Deductible Contributions you made, to be offset by the amount on the 1099-R. Any earnings in the IRA will be taxable. Example case, you contributed $2000 and by March earned $15 dollars. The 1099R was for $2,015 and the non-deductible contribution was $2000 making the $15 taxable in the current year.
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