2024 turbotax online is making it impossible to enter a backdoor roth.

[brentMD]

For the life of me I can't get it to let me enter back door roth. Put 7k non-deductible (post tax) into my Trad IRA, several dayslater rolled it over to Roth IRA. Have a 1099-R from trad IRA. Turbotax will not account for this, keeps reducingmy refund.

[AnnetteB6]

Take a look at the following TurboTax help article for step-by-step guidance to enter the transactions associated with a backdoor Roth IRA conversion.  If you are still having trouble after following these steps, please let us know what is happening in your return and someone will try to help.

How do I enter a backdoor Roth IRA conversion?
 

[brentMD]

This still did not work.  I've been working on it for hours, read this article, others articles.  The info in that article doesn't correct the entry problem.  As soon as I enter my 1099-R my deduction drops massively and never recovers even though it was a post tax non-deductible contirbution. 

[brentMD]

Nomatter what I do I cannot get the 1040 Line 4b to read 0

[Yishai]

I'm having the same issue. I asked their AI (under help). It said it was a known issue with the online software in "some circumstances" and to keep an eye out for a fix.

[brentMD]

I think I figured it out.  I happen to have a prior SEP-IRA, and this makes any backdoor Roth rollover fall under the pro-rata rule. A complicated thing but basically the government ends up double taxing a backdoor roth based on your percentage of post to pretax assets in the IRA's. Looks like turbotax automatically accounts for this but does not explain it in any way!

[DanaB27]

Yes, if you have pre-tax funds in your traditional/SEP/SIMPLE IRAs on December 31, 2024, then the pro-rata rule applies. 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/don't have pre-tax funds.  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.

@brentMD 

@Yishai  The issue has been fixed. Please review the instructions below for TurboTax Online:

To enter the nondeductible contribution to the traditional IRA:

1. Login to your TurboTax Account 
2. Click on "Search" on the top right and type “IRA contributions” 
3. Click on “Jump to IRA contributions"
4. Select “traditional IRA”
5. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
6. Enter the amount you contributed
7. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
8. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contribution before this tax year.
9. Enter your basis in the Traditional IRA from your 2023 Form 8606 line 14 (if you had a basis in the prior year)
10. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (if you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible).

To enter the Form 1099-R conversion: 

1. Click on "Search" on the top right and type “1099-R”  
2. Click on “Jump to 1099-R”
3. Click "Continue" and enter the information from your 1099-R
4. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
5. On the "Review your 1099-R info" screen click "Continue"
6. Answer "Yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
7. Answer the questions about the basis from line 14 of your 2023 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

[JFalin]

I have the same issue. What are the instructions for desktop TurboTax?

[DanaB27]

@Emily-E-Dougherty make sure you marked in the follow-up questions that you had an inherited IRA. To clarify, you made an nondeductible Traditional IRA contribution for 2024 in 2024 and converted it in 2024? 

Please note if you had any gains then this would be taxable. Also, if you had any other pre-tax funds in your IRA then the pro-rata rule applies. This means that with each distribution/ conversion you will have a taxable and nontaxable part. 

@JFalin  Please see the instructions below for TurboTax Desktop:

To enter the nondeductible contribution to the traditional IRA:

1. Open your return
2. Click “Deductions &Credits” on the top
3. Click "I'll choose what to work on"
4. Scroll down to “Traditional and Roth IRA Contributions” and click “Start”
5. Select “traditional IRA”
6. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
7. Enter the amount you contributed
8. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
9. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had nondeductible contributions before this tax year
10. Enter your basis in the Traditional IRA from your 2023 Form 8606 line 14 (if you had a basis in the prior year)
11. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (if you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible).

To enter the 1099-R conversion: 

1. Click "Federal Taxes" on the top and select "Wages & Income"
2. Click "I'll choose what to work on"
3. Scroll down and click "Start" next to "IRA, 401(k), Pension Plan (1099-R)" 
4. Answer "Yes" to the question "Did You Have Any of These Types of Income?"
5. Click "I'll Type it Myself"
6. Choose "Form 1099-R, Withdrawal of Money from 401(k) Retirement Plans, Pensions, IRAs, etc."
7. Click "Continue" and enter the information from your 1099-R
8. Answer questions until you get to “What Did You Do With The Money” and choose “I moved it to another retirement account”
9. Then choose “I did a combination of rolling over, converting, or cashing out money.” and enter the amount next to "Amount converted to a Roth IRA account"
10. On the "Your 1099-R Entries" screen click "continue"
11. Answer "yes" to "Any nondeductible Contribution to your IRA?" if you had any nondeductible contributions in prior years.
12. Answer the questions about the basis from line 14 of your 2023 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs