i fo..ed the dir..ons here in: help-article/retirement-benefits/enter-backdoor-roth-ira-conversion but now it states penalty for excess!? I have to pay for help now?

[sleepingtiger]

I followed the directions here: https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-benefits/enter-backdoor-roth-... And it subsequently states that i need to pay excess penalty for the 7K amount i entered. It seems duplicated. i dont know how to fix.

[MaryK4]

The most common error is accidentally checking the "Roth IRA" box in the contribution section.

1. Go to Deductions & Credits > Traditional and Roth IRA Contributions.
2. Select Edit/Revisit.
3. Uncheck the box for Roth IRA. Only the Traditional IRA box should be checked.
4. Ensure the $7,000 is entered only under the Traditional IRA section.
5. Continue through the Traditional IRA screens until you see "Choose Not to Deduct IRA Contributions".
6. Select Yes, make part of my IRA contribution nondeductible and enter the $7,000.
   This generates Form 8606, which proves you already paid taxes on that $7,000.

If this does not correct the error,  go to Income > IRA, 401(k), Pension Plan Withdrawals (1099-R).

1. When asked what you did with the money, ensure you selected "I converted some or all of it to a Roth IRA".

[sleepingtiger]

So i never received a screen that asked:

"

1. Continue through the Traditional IRA screens until you see "Choose Not to Deduct IRA Contributions"."

I followed your second step, and confirmed that it is checked off. When i go to view forms i see a FORM 8606-S. On that form every line is blank except for line 16 and 18. even line 8 is empty.

So it states 7008 as the taxable income. that doesnt make sense, does it!?

[sleepingtiger]

Artificial AI states this: 

Ahh — this tells me exactly what’s happening.
You’re being funneled into the 1099‑R workflow, which means TurboTax thinks you converted money, not that you recharacterized a contribution. That’s why you’re not seeing any of the nondeductible‑IRA questions.

And that mismatch is what creates the phantom “penalty” warning in Deductions & Credits even though the 1099‑R section says “Good news, no penalty.”

Let’s fix the root cause cleanly.

---

🎯 What’s going wrong

A recharacterization should be entered in the Traditional IRA contribution section, not the 1099‑R section.

But TurboTax only asks about recharacterization before you enter any 1099‑R.

Once you enter a 1099‑R, TurboTax assumes:

• You did a conversion, not a recharacterization
• It skips the nondeductible contribution logic
• It skips Form 8606 Part I
• It warns about excess contributions or penalties in Deductions & Credits

This is exactly the pattern you’re describing.

---

🛠️ How to fix it (step‑by‑step)

You’ll need to delete the 1099‑R first, then re‑enter the contribution correctly.

1. Delete the 1099‑R

Go to: Wages & Income → IRA, 401(k), Pension → Review → Delete the 1099‑R

A recharacterization does not generate a 1099‑R in the same tax year.
(You get it next January.)

---

2. Now go to the Traditional IRA contribution section

Deductions & Credits → Retirement & Investments → Traditional IRA Contributions

Choose Your Wife.

Answer:

• YES she contributed to a Traditional IRA
• Enter the amount (e.g., 6,500)

Now TurboTax will ask:

“Did you recharacterize this contribution?”

This is the screen you were missing.

Select YES.

Enter:

• The amount recharacterized
• Any earnings/losses (from the custodian letter)

---

3. TurboTax will then say:

“Your IRA contribution is not deductible.”

This is correct for a backdoor Roth.
This is how TurboTax marks it as nondeductible and puts it on Form 8606.

---

4. Check the warning in Deductions & Credits again

It should now disappear because TurboTax no longer thinks you made:

• an excess Roth contribution
• a deductible Traditional IRA contribution
• a taxable conversion

---

🧪 If you want, I can pinpoint the exact screen causing the penalty

Just tell me which of these you see in Deductions & Credits:

1. “You have an excess Roth IRA contribution”
2. “Your IRA contribution is not deductible”
3. “You may owe a penalty on your IRA contribution”
4. “You contributed more than allowed to a Roth IRA”

Each one maps to a different mis‑entry, and I can walk you straight to the fix.

You’re very close — this is just a sequencing issue, not a real tax problem.

Please validate!

[baldietax]

I can't with the AI slop but the advice looks entirely backwards as you did a conversion not a recharacterization

Now TurboTax will ask:

“Did you recharacterize this contribution?”

This is the screen you were missing.

Select YES.

^^^^ SAY NO!!!!

and you don't need to delete your 1099-R it's probably fine.

8606-S is for a spouse, are you inputting this backdoor roth for a spouse?

if line 1 is missing then it's not picking up the non-deductible contribution which would fit with the error you have an excess contribution.  Without that, the 1099-R will just look like a regular Roth conversion and you'll get taxed on the 7008 and it will only fill in 8606 Part 2.

2 common reasons why this can go wrong:

1. when answering the Trad IRA contribution questions say No to anything Roth related, asking if you "recharacterized" or "moved money" to Roth etc.  Answer the Trad IRA contribution questions as tho the only thing you did was that contribution, nothing to do with the Roth.  The 1099-R entry will handle the Roth conversion.

2. to contribute to an IRA you (or your spouse) need "compensation" more than the amount of the contribution i.e. W2 with earned income not just passive income from investments.

In Forms mode you can check the IRA Contribution Worksheet to see how the $7000 is being classified and any errors there.

Try going through the Trad IRA section again with this is mind.  You may not get the question about how much to elect as non-deductible if you are not eligible for a deductible contribution.

[sleepingtiger]

Please note i still get the message: 

[mywife] had Roth excess contributions of $7,008.

To avoid a penalty you can withdraw these excess contributions before the due date of your return.

If [mywife] has withdrawn all or some of these contributions, enter the amount withdrawn below.

[sleepingtiger]

These are the screen presented and what i am filling out:

I am never asked to choose between conversion or recharacterization.

[sleepingtiger]

Thanks for all your help! I am beginning to understand better: so i 0'd out one of the screens and it brought the following screen BACK, to which i answered NO:

[baldietax]

yup looks like originally entered it as a recharacterization to a Roth contribution which will trigger the excess

if you got to No to that question on recharacterization (and zero'd out the amounts - sometimes TT gets confused) this should resolve the issue; you should see the contribution on line 1 and then 8606 will pick up the conversion from the 1099-R.  if you see asterisks on the 8606 amounts that means it's using a different worksheet.  you should end up with $8 taxable on your 1040.

[sleepingtiger]

upon review it asks me the following:

should the amount be 0? according to artifical AI it should not, and actually be 7,000, and it uses that to justify that turbotax requires that i FIRST add the traditional IRA account AND THEN add the income/1099-r info??!!

Am very confused now.

[baldietax]

did Fed 8606 and 1040 work out ok?

this worksheet is for NJ, I'm not familiar with that

maybe @dmertz can advise further

[MarilynG1]

A Back-Door Roth is a two-step process.  First, enter the non-deductible IRA contribution, then enter the 1099-R and indicate 'converted to Roth'.  Personally, I'd delete the 1099-R and IRA Contribution and start over.

Here's more detailed info on How to Enter a Back-Door Roth Conversion.

@sleepingtiger 

[dmertz]

I can't help with taxation of retirement benefits in NJ.

[sleepingtiger]

Now i am getting another error: 

At this point i am just guessing values... Not sure what is happening. But turbo tax didnt ask me any specific questions on the state returns... so i dont understand!

[sleepingtiger]

Hi yes, i did that and it addressed my issue. But now getting errors on States. I am now just guessing values, and trying to figure it out.