I did a backdoor Roth IRA in 2016. There is no income limit , yet your software keeps telling me I made too much money and must pay an annual penalty. How do I fix this?

[ChristinaS · Accepted solution]

If you made a backdoor Roth contribution, you didn't make a Roth contribution. A backdoor Roth is a Traditional IRA contribution which is converted to a Roth. In Turbo Tax, you enter your contribution as a Traditional IRA contribution that is nondeductible. You don't enter as a Roth IRA contribution, because that's not correct.

Step 1- Enter the nondeductible Traditional IRA contribution under Deductions and Credits- IRA contributions. This establishes basis on Form 8606.

Step 2- Enter the 1099-R showing the conversion from the Traditional IRA into the Roth.

If the conversion occurred in 2017, you won't have the Step 2 until next year.