how to report backdoor roth - step by step

Here are the step by step instructions to enter your Back Door Roth contribution. 

I recommend that you delete whatever you have entered and follow these step by step.

How to Enter a Backdoor Roth

Thank you! According to your link everything checks out when I verify the 1040:

To check the results of your backdoor Roth IRA conversion, see your Form 1040:

1. Select Forms in the upper-right corner of the screen.
2. Select Form 1040 from the left menu.
3. Use the scroll bar to find:
   • Line 4a IRAs Distributions. Your backdoor Roth IRA amount should be listed.
   • Line 4b Taxable amount should be zero unless you had earnings between the time you contributed to your Traditional IRA and the time you converted it to Roth IRA.
4. Select Schedule 1 from the menu in the left side of the screen. Line 19 IRA deduction should be blank.
5. To return to where you left off in TurboTax, select Step-by-Step in the upper-right corner of the screen.

Those results don't seem to work on the Home and business copy of Turbo Tax. Is here another way of doing it in this copy of the software. Nothing matches when I get into the 1099-R looks completely different.

 Ern

A backdoor Roth IRA allows you to get around income limits by converting a Traditional IRA into a Roth IRA. Contributing directly to a Roth IRA is restricted if your income is beyond certain limits, but there are no income limits for conversions.

Doing a backdoor Roth conversion is a two-step process.

TurboTax Online

TurboTax CD/Download

I am having the same issue in Premier. After I select, converted all the money into a Roth IRA account it doesn't ask any further questions. Taxable amount is equal to IRA distribution on 1040.

Delete the 1099-R and start the process over again ... you MUST do the contribution FIRST and then the 1099-R ... https://ttlc.intuit.com/community/entering-importing/help/how-do-i-enter-a-backdoor-roth-ira-conversion/00/25567#sh-collapse2

Finally it worked.. By the way I did do the contributaion first, and it wouldnt work  I then had to delete the 1099-r and redo the contribution and then the 1099_R before it would work..

 Thanks for the help..

 Ern

It took me forever, but as everyone stated, this year's Turbotax requires the IRA contribution and conversion to Roth first, followed by entering the 1099-R.  Horrible SW to not handle this properly regardless of the order of entry.

If you entered in the step-by-step order (i.e. the wrong way for TY2019), deleting the 1099-R and IRA contributions in step-by-step may not be sufficient.  It wasn't for me.

I needed to go to forms and then delete all IRA worksheets, 1099-R, etc.

Then following the prescribed order worked as described in: https://ttlc.intuit.com/community/entering-importing/help/how-do-i-enter-a-backdoor-roth-ira-conversion/00/25567/message-id/613

I made non-deductible IRA contributions on 4/14/19 for 2018 which I reported on my my 2018 return. The conversion to Roth were processed by my investment company the following week, so I received 1099-INVs for the distributions from the traditional to fund the Roth conversions.  The 2019 turbo tax software is showing an error and not letting me complete the taxes when I indicate the full amount of the distribution was converted because it doesn't see the corresponding non-deductible contribution. How do input the information to allow for proper filing of this backdoor Roth contribution?

"I received 1099-INVs for the distributions from the traditional to fund the Roth conversions."

This would have been reported on a Form 1099-R. There is no such thing as a 1099-INV.

If you used TurboTax to prepare your 2018 tax return which, properly prepared, would have included Form 8606 showing your nondeductible traditional IRA contribution having been included in the total on line 14.  Transferring that tax return file into 2019 TurboTax would have transferred in this basis to show on line 2 of your 2019 Form 8606.  However, if, when TurboTax asked, you inadvertently indicated that you did not make nondeductible contributions for any years proper to 2019, 2019 TurboTax would have silently deleted this information that had been carried over from your 2018 tax return.

If the basis information is still present in your 2019 tax file, you'll see it on TurboTax's IRA Information Worksheet and will also be present on Form 8606 line 2 to be used in calculating the taxable amount of your Roth conversion.  Be sure to click the Continue button on the Your 1099-R Entries page to reach the questions asking you to confirm your basis and for your year-end balance in traditional IRAs.  If your year-end balance in traditional IRAs was nonzero, some, perhaps a large portion, of your Roth conversion will be taxable with the inapplicable portion of your basis remaining with your traditional IRAs to be applied to future distributions, all calculated on Form 8606.

I contributed to 2019 traditional IRA in Feb 2020 and converted it to Roth after 2 weeks. 

Additionally, I also contributed for 2020  traditional IRA in March 2020 and converted it to Roth after 2 weeks.

As these happened after Dec 31st 2020, I haven't received any forms for 2020 year. 

How should I enter this scenario in Turbotax ? 

Please help ! Thanks in advance ! 

Shahvatsal92, your post is self-contradictory.  You said both that the Roth conversions occurred in early 2020 and that these Roth conversion occurred after December 31, 2021.  Both can't be true.

I assume you meant before not after dec 2020. I would just contact your investment firm for the paperwork.

Sorry I meant it this way : 

I made 2020 year contribution in 2021 ( as you can contribute for 2020 till 2021)

And then I contributed for 2021 year in March 2021 as well.

The traditional IRA contribution that you made for 2020 in 2021 is reportable on your 2020 tax return.  Any Roth conversion that you did in 2021 is reportable on your 2021 tax return.

If you similarly made a traditional IRA contribution for 2019 in 2020 and you did a Roth conversion of that money in 2020, the traditional IRA contribution for 2019 was reportable on your 2019 tax return and the 2020 Form 1099-R reporting the distribution that was converted to Roth in 2020 is reportable on your 2020 tax return.  Any amount that appeared on line 14 of your 2019 Form 5329 transfers to line 2 of your 2020 Form 8606 to be used in determining the taxable amount of your 2020 tax return.

I followed the instructions on the link but turbotax keeps telling me that box 2a (taxable amount) cannot be 0 if line 4 (federal income tax withheld) is 0 ("no prior year excess traditional IRA contribution) and won't let me efile. Also the turbotax website did not fully match the instructions in the link so not sure if there have been updates since last year. Do you have any thoughts/ideas on why this may be coming up? Thanks!

Box 2a of a code 1, 2 or 7 Form 1099-R with the IRA/SEP/SIMPLE box marked must have the same value in box 2a as is in box 1.  With tax withholding in box 4, the code in box 7 cannot be 2.

nevermind, ignore my question, thanks!

In my case, I contributed to a roth IRA account first before recharacterizing to a traditional IRA to do the backdoor IRA. All of this was done in Feb 2021 for 2020 tax season so I don't have 1099 forms yet. In reporting with a downloaded version of turbo tax, what parts of this step by step process should I do differently because my form 8606 and 1040 seem to be riddled with errors at the moment. I would greatly appreciate some help. 

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@Sika wrote:

In my case, I contributed to a roth IRA account first before recharacterizing to a traditional IRA to do the backdoor IRA. All of this was done in Feb 2021 for 2020 tax season so I don't have 1099 forms yet. In reporting with a downloaded version of turbo tax, what parts of this step by step process should I do differently because my form 8606 and 1040 seem to be riddled with errors at the moment. I would greatly appreciate some help. 

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The proper way to report the recharacterization and earnings which is to enter the 2020 IRA contribution in the IRA contribution interview section and then say yes to "Did you switch from a Roth to a Traditional IRA - recharacterize".

The amount The amount of the original Roth contribution must be entered - not any earnings or losses.

Then TurboTax will ask for an explanation statement where it should be stated that the original $xxx.xx plus $xxx.xx earnings (or loss) were recharactorized.

There is no tax or penalty on the before-tax earnings since the earning were simply switched into the recharactorized account.

Enter IRA contributions here:
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),
Retirement & Investments,
Traditional & Roth IRA contribution.

OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.

Say you do not want to deduct it if the question comes up to be an after-tax contribution reported on a 8606 form (line 1 & 14) as a "basis" in the Traditional IRA that will reduce the tax of future distributions.

Thank you so much. 

So when asked about total contributions to traditional IRA account, the correct answer is 'zero' then since I technically did not contribute to the traditional IRA account but 'recharacterized' funds to that account only to be transferred back to the roth IRA account. Is this correct? 

I tried the alternative by putting the amount I 'received' from the recharacterized roth account and my contribution doubled requiring me to pay 6% tax on the excess further down the line. So it seems because of my route to the backdoor roth, my traditional IRA contribution is supposed to be 'zero'. right? Thanks

I do this on Turbotax Premier (and check the 1040 and Schedule 1 as advised) and it then says that "You Have an Excess Roth Contribution" and because your contrubtion isn't permitted, it's considered an excess contribution of $7,000" and the next screen says "You Currently Have a Penalty", WTF?

Hello,

I believe your answer would help in my situation, but I hope to rephrase my understanding to make sure I got it right. Hope you can help confirm:

Situation: In early 2021, I contributed after-tax money into my Traditional IRA for year 2020, and then followed the backdoor Roth to convert it into Roth IRA. Hereby I didn't receive any 1099-R form from my investment account. 

As you mentioned, since the conversion happened in 2021, 1099-R should be reportable in my 2021 filing, which means if reflecting into  TurboTax's official guide , I should do Step 1 and skip Step 2 (all the stroke-through steps). Is it correct understanding?:

Step 1: Enter the Non-Deductible Contribution to a Traditional IRA

1. Open your return if it’s not already open.
2. Search for ira contributions and select the Jump to link in the search results.
3. Select Traditional IRA on the Traditional IRA and Roth IRA screen and continue.
4. Answer Yes on the Did you Contribute To a Traditional IRA? screen.
5. Answer No on the Is This a Repayment of a Retirement Distribution?
6. On the Tell Us How Much You Contributed screen, enter the amount contributed and continue.
7. Answer No on the Did You Change Your Mind?
8. Depending on your situation, answer the remaining questions.

Step 2: Enter the Conversion from a Traditional IRA to a Roth IRA

1. Inside TurboTax, search for 1099-r and select the Jump to link in the search results.
2. On the Your 1099-R screen, answer Yes to Did you have any of these types of income in 2020? and continue.
   • If you land on the Your 1099-R Entries screen instead, select Add Another 1099-R.
3. Select how you want to enter your 1099-R (import or type it in yourself) and follow the instructions.
4. You should see the Good News: You Don’t Owe Extra Tax on This Money screen. Continue.
5. Answer No to Did You Inherit This IRA?
6. On the What Did You Do With The Money From This Payer? screen, select I moved the money to another retirement account (or returned it to the same retirement account).
7. Next, choose I converted all of this money to a Roth IRA account.
8. Continue answering questions until you come to the Your 1099-R Entries screen.

To check the results of your backdoor Roth IRA conversion, see your Form 1040:

1. Select Forms in the upper-right corner of the screen.
2. Select Form 1040 from the left menu.
3. Use the scroll bar to find:
   • Line 4a IRAs Distributions. Your backdoor Roth IRA amount should be listed.
   • Line 4b Taxable amount should be zero unless you had earnings between the time you contributed to your Traditional IRA and the time you converted it to Roth IRA.
4. Select Schedule 1 from the menu on the left side of the screen. Line 19 IRA deduction should be blank.
5. To return to where you left off in TurboTax, select Step-by-Step in the upper-right corner of the screen.

Thank you in advance

That is correct.   Report the 2020 contribution.    The conversion  will be reported next year.