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PNY61
Returning Member

Backdoor Roth IRA and "Income Too High"

I attempted to follow the steps for entering a backdoor Roth IRA conversion from the TurboTax article, however only parts 1 through 9 under Step 1 match the screens that I see. 

After part 9, I see "Tell Us How Much You Transferred".  I enter 0 since this isn't a transfer.

Next, I see "Any Excess IRA Contributions Before 2023?".  I select No

Next, I see "Any Nondeductible Contributions to your IRA".  I select "Yes, I made and tracked nondeductible contributions to my IRA."

Next, it asks for the Total Basis as of December 31, 2022.  I enter 0 as this is a first; no prior Form 8606.

Next, I see "Tell Us the Value of All Your Traditional IRA Accounts".  I enter the value from Form 5498.

Next it says I make too much and can't deduct it.

 

When I go to the end anyways, the Form 8606 definitely isn't filled out correctly.

 

Any advise on how to proceed?

-Thank you

 

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6 Replies
PNY61
Returning Member

Backdoor Roth IRA and "Income Too High"

A little more info on the 8606:  Line 13 has a value in it but it is not the same as the amount on Line 3.  Not sure where the value on Line 13 is coming from.

dmertz
Level 15

Backdoor Roth IRA and "Income Too High"

When entering the traditional IRA contribution, you mistakenly told TurboTax that you "switched" (recharacterized) your traditional IRA contribution to be a Roth IRA contribution instead.  You did not recharacterize, your converted.  Got back and edit your traditional IRA contribution entry and answer No when asked if you switched (or say that the amount that you switched was zero).

PNY61
Returning Member

Backdoor Roth IRA and "Income Too High"

Thank you!  On the Income side, I had a non-zero value in "Outstanding Characterizations".  Corrected that to 0. Unfortunately, even though Form 8606 is updated, Lines 13 and 14 are still not the same.

I already checked with Fidelity.  They indicated I have everything I need.  Of course, they can't provide tax advice, but as far as data goes, it should work out.  I watched a couple Youtube videos of folks stepping through this process and I can't tell what I'm doing wrong. 

At this point, I'm tempted to do a "Clear & Start Over".

PNY61
Returning Member

Backdoor Roth IRA and "Income Too High"

Can't clear and start over, so need to be able to fix it as is.

I'm wondering if something happened when forms were automatically pulled in from the provider.

DanaB27
Expert Alumni

Backdoor Roth IRA and "Income Too High"

To clarify, you made the nondeductible contribution for 2023 and then converted all of it in 2023?

 

If yes, then line 13 should be your nondeductible contribution amount (assuming your traditional IRA was empty at the end of 2023/value $0). And line 14 should be $0.

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PNY61
Returning Member

Backdoor Roth IRA and "Income Too High"

Yes, both actions were in 2023.

 

The previous expert's response was the actual fix for the issue.  The issue afterwards was my misunderstanding of the Pro Rata rule. 

Between Youtube videos, articles, and working through the 1040 & 8606 manually, I think I get it now.  I don't like it and think it's wrong, but it is what it is.

 

Thank you for your help (and patience) on this.

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