Backdoor Roth for two years how to make entry in turbotax.

[rajievgrover]

On Backdoor Roth how to make entry in turbotax. I paid in tradational ira 7500 for year 2023 and 8000 for year 2024 . Both tn year 2024 (before April ). I transfered both the amounts - the total 15500 to roth . I have done this correct for 2023 . Now while I ma doing 2024 I am getting penalty messages

[DanaB27]

You should have reported the nondeductible contribution for 2023 on your 2023 return and TurboTax should have created a 2023 Form 8606 with a basis on line 14.  This basis will be entered in your 2024 tax return.

To enter the nondeductible contribution to the traditional IRA for 2024:

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

Please see How do I enter a backdoor Roth IRA conversion? for instructions in TurboTax Desktop.

[rajievgrover]

Hi Thanks . However the Form 8606 does nt seem right.  I have a basis of $7500 as I deposited aftre tax $ to traditional IRA for year 2023 in between January and april of 2024 . I had manualy sent my Form 8606 in 2023 so there is no history . However I did fill $7500 as  my basis  ( line 14 from  8606 of 2023) and I mentioned all other items as per what has been suggested on the steps. The form 8606 here is different as after line 3 in the form it skips all other lines and populated line 14 with 15500. While I have done a conversion to Roth of this $15500. So as a result I am having no entries in line 8, 9,10,11 and 13 and wheras line 14 should be $0 ( no basis) its is now shaowing a basis of $15500  as it must have populated line 3 to line 14. IS there sum program bug or the steps  that you mentioned needs to be different

[Opus 17]

While you can make a contribution in 2024 that is retroactive to 2023, the "backdoor" conversion to traditional IRA only happens when it happens.

You should have reported on your 2023 tax return, a non-deductible contribution of $7500.

Then report on your 2024 return, a non-deductible contribution of $8000 and a rollover/conversion to Roth IRA of $15,500.

(This assumes that your $7500 contribution in April 2024 was actually made retroactive to 2023 and you told the plan this at the time.  Sometimes you may have to notify the plan and make a special selection.  If you don't tell them it is a 2023 contribution, they will record it for 2024 by default and then you do have an excess and a problem.)

[rajievgrover]

Thanks for a very quick resposne. I did as you have mentioned .

1. In 2023 I reported my non deductible contribution to  traditional IRA as $7500 (showed up line 1 of 8606 2023)

Since there was no conversion in 2023  I had total basis in traditional IRA listed as $7500 ( line 14 of 2023 form 8606)

This was not in turbo tax . The  8606  has the lines 1, 3 and 14 populated 

2. Now in  2024 I am using turbo tax 

I have shown $8000 as non deductible contribution to traditional IRA for 2024 

I have  entered on the querry of basis (Dec 31st 2023 )  in turbotax  as $7500 ( this comes from line 14 of 2023 year 8606)

And a roll over conversion as $15500 ( as this was done in 2024)

And when I look at the form generated 

it has line 1 ($8000) , line 2 ($7500) , line 3 ($15500) and line 14 ($15500) populated  

No other line is poplulated  Though  I chose the  Conversion to roth

My understanding : The following lines to should have shown in my form 8606  But it is not showing up

line 5, line 8 , line 9 ,line 11, line 13, lin 16 and line 17  should have been $15500 , however shows a blank

line 10 should have been 1.000 but is showing blank

Line 14 should have been $0 (sine all has been converted into Roth)  but instead is showing $ 15500 ( as basis for 2024 and earlier years). So I am tryiong to understand if there is abug somewehere or I have done some step differently).

thanks

[Opus 17]

But how did you tell the program "I converted to a Roth IRA"?  Did you enter a 1099-R for some amount of money that was $15,500 or slightly larger (with interest or growth)?  The 1099-R could have code 1 or code 2 in box 7, it should not have other codes.  

[rajievgrover]

While entering the 1099 R details the querry  " Moved the money to another retirement account (or returned it to the same retirement account)" and subsequent  " rolled over all the money to another tradational IRA  or other retirement account". 

[Opus 17]

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@rajievgrover wrote:

While entering the 1099 R details the querry  " Moved the money to another retirement account (or returned it to the same retirement account)" and subsequent  " rolled over all the money to another tradational IRA  or other retirement account". 

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You're not getting the right choice, if you are only seeing traditional IRA, then the program is not seeing a Roth conversion.  @dmertz  @Hal_Al  Where is the customer missing the correct question?