I did a Roth IRA conversion and answered all questions on TurboTax correctly. However, TT made my $6500 contribution taxable. What should I do to make it non-taxable?

[celerityseiche]

I need to make my 1040 form line 4b be 0, but I can't figure out how to do that through answering TurboTax's series of questions.

[VolvoGirl]

A Traditional IRA conversion to a ROTH IRA is normally taxable.  Why do you think it shouldn’t be taxed?  Did you have a after tax basis in the IRA?  And why do you mention a contribution?  Are you doing a back door contribution?  

[fanfare]

If your IRA has been funded with deductible contributions, generally you won't be able to do a tax-free "backdoor contribution" to a Roth IRA.

@celerityseiche 

[jrdinsmore]

i have this issue every year and Turbotax has never fixed it. one fix is t change the 1099r box 2a to ZERO. With so many people doing back door roths every year i am not sure how both answers think it is taxable!! you contribute on day 1 and "convert" (it seems TT thinks that is recharacterizing) the next day. that would never be a taxable event. i am so disappointed in TT! 

[AnnetteB6]

There is no issue in TurboTax when reporting a backdoor Roth IRA conversion.  It is a simple, two-step process if the non-deductible Traditional IRA contribution and the subsequent conversion to a Roth IRA take place in the same calendar year.  It can be a bit more complicated if these two steps span over two years.  

See the TurboTax help article below for instructions:

How do I enter a backdoor Roth IRA conversion?
 

Not everyone uses the 'backdoor' method when converting a Traditional IRA to a Roth IRA.  The conversion can take place from any Traditional IRA, including one with deductible contributions.  If that is the case, then it is not a tax-free transaction.  If the taxpayer has any Traditional IRA accounts with any deductible contributions, then at least a portion of the amount converted will be taxable.  TurboTax can handle this situation as well.

Also, it is never a good idea to alter your inputs of Form 1099-R to be different than what was reported to you.  That's a good way to get a letter from the IRS down the road.

@jrdinsmore 

[ndesai2005]

May I ask on how to handle a Roth conversion of an amount spanning non-deductible contributions across 2 years?

Specifically, my wife made non-deductible contributions up to the limit to a traditional IRA in 2023 and 2024, but only converted them both to a Roth in 2024, resulting in a single 1099R distribution of both sums. 

I now cannot get TurboTax to recognize this converted amount as non-taxable, whereas it recognizes mine as a non-taxable conversion just fine (same year contribution/conversions).

Thanks,
N

[AnnetteB6]

Make sure that the 2024 non-deductible Traditional IRA contribution has been entered into the return, and that the prior year (2023) contribution has been included in the basis of the Traditional IRA for your wife.  Once this has been done, then the conversion to the Roth IRA should be non-taxable.

For good measure, be sure you are following the steps in the TurboTax article below and pay attention to the last section regarding whether you need to file a Form 8606 to account for the 2023 contribution if it was not reported on your 2023 tax return and Form 8606.  This section will also give you steps to enter the basis of the Traditional IRA of your wife.

How do I enter a backdoor Roth IRA conversion?
 

@ndesai2005 

[david289]

I am having the same problem as jrdinsmore. I entered both my traditional IRA contribution (100% non-deductible), and my conversion to a Roth, and TT is still considering the conversion as a taxable event. How can I fix this without changing box 2a on my 1099-R to $0?

[DanaB27]

To clarify, you show a taxable amount on line 4b of your Form 1040? 

If yes, did you have any earnings before the conversion? These would be taxable.

Did you have any other pre-tax funds in you Traditional/SEP/SIMPLE IRA accounts? Or enter a value more than $0 for the value on December 31, 2024?  If yes, then the pro-rata rule applies. This means that with each distribution/ conversion you will have a taxable and nontaxable part. You can see the remaining basis on line 14 of Form 8606, this basis can be carried forward.

Please review How do I enter a backdoor Roth IRA conversion?

@david289 

[david289]

@DanaB27yes I show a taxable amount on line 4b of my Form 1040.

I did not have any earnings before the conversion. The conversation was immediate.

I did not have any other pre-tax funds (or any funds at all) in my Traditional IRA account prior to the contribution. I entered $0 for the value on December 31, 2024.

[DanaB27]

The amount converted was only the contribution for 2024? Or also for 2023?

If you conversion include the 2023 contribution then you need to enter the basis from your 2023 Form 8606 line 14 when TurboTax askes about the prior year basis. This should be the nondeductible Traditional IRA contribution amount for 2023.

Your 2024 Form 8606 should have the contribution for 2024 on line 1 and the contribution for 2023 on line 2.

To confirm you show the conversion in part II of Form 8606?

@david289