Backdoor IRA Conversion Confusion

[urbantempest1]

I am having some trouble with Turbotax 2023 and backdoor IRA conversion. I think that I have followed the directions, however when I select that I have made and tracked non-deductible contributions to my IRA, the next screen asks for the Total Basis from form 8606. When i enter $12000 (or $11577), Turbotax replies that 'the IRA basis we transferred from 2021 is different than the basis entered. 

In my 2021 return, here's what i have in Form 8606"

• line 1 = 6000
• line 2 = 6000
• line 3 = 12000
• line 4 = blank
• line 5 = 12000
• lines 6-12 = blank
• line 13 = 11577
• line 14 = 423

What am i doing wrong? 

[DanaB27]

Your prior year basis is listed on line 14 of your 2021 Form 8606, therefore you should enter $423 when TurboTax asks about the prior year basis.

Please review the instructions below if needed.

To enter the nondeductible contribution to the traditional IRA for 2022:

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 2021 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 that happened in 2022: 

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 2021 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

[urbantempest1]

Thanks, but I get the same error with $423. 

[DanaB27]

Do you remember what TurboTax had as the imported basis amount? To confirm you didn't make changes to your 2021 return after filing?

If you verified your basis amount from 2021 and prior years then enter $423 from line 14 of your 2021 Form 8606. For the explanation enter "$423 as shown on the 2021 Form 8606 line 14. Error when transferring data".

[urbantempest1]

I'm not sure. FOr the last 2 years, I've been contributing $6000 to a Traditional IRA and then converting it to a Roth IRA as soon as it posts. My 2020 Form 8606 shows:

Line 1 = 6000

Line 2 = 0

Line 3 = 6000

Line 4-13 = 0

Line 14 = 6000

I'm only seeming to have a problem this year. $11577 looks to be the value of my 1099-R for this account.

Thanks for your help, 

Jamie 

[DanaB27]

Your 2020 Form indicates that you made a $6,000 contribution for 2020 but did not convert it until 2021. And in 2021 you made a contribution for 2021 and then converted the 2020 and 2021 contributions. 

To confirm, you didn't have any pre-tax funds in the traditional/SEP/SIMPLE IRAs, correct? And your balance/value on December 31, 2021, was $0 because you had converted all funds in 2021.

It seems you might had a loss before converting the funds since you converted $11,577 and therefore had a basis left of $423 but your account's value was $0. Maybe this caused issues with the transfer when TurboTax imported the data from the previous year.

To move forward I would enter the basis as $423 for prior years and then fill out the explanation statement. The IRS has your 2021 Form 8606 with a $423 basis on line 14 so this shouldn't cause any issues.

@urbantempest1