I have a non-zero value for "traditional IRA Accounts on December 31, 2024" but that is not showing up on Form 8606. I have a backdoor conversion. Isn't that incorrect?

[amit-mahajan12]

I contributed to IRA (non-deductible because I don't meet the income requirement), and converted that money to Roth IRA (backdoor conversion). I already have money in a traditional IRA through a 401k rollover. That means that when I do the conversion the pro-rata rule should apply and I have to pay taxes on some of the converted amount. However that is not happening, and I don't see my IRA account value on December 31, 2024 showing up on Form 8606. What could I be doing wrong, or is there a known issue? One thing to note is that I had filled all information in TurboTax first with value on Dec 31, 2024 as 0, and then later went in and updated that value but that does not seem to reflect anywhere (neither in tax refund amount nor on 8606).

[dmertz · Accepted solution]

If lines 13 and 15 of this Form 8606 have asterisks, which is likely, TurboTax is using Worksheet 1-1 from IRS Pub 590-B (Taxable IRA Distribution Worksheet in TurboTax) to perform the calculation instead of using lines 6 through 12 of Form 8606.  This worksheet will be present among the worksheets in TurboTax.

[amit-mahajan12]

Thank you @dmertz! You are right, lines 13 and 15 do have asterisks. Where can I sheet the worksheet you are referring to? More importantly, the other thing that I would expect due to the pro-rata rule is tax implication, but adding the vale of my IRAs as of Dec 31, 2024 did not affect the amount due at all. That makes me think that something is not right.

[dmertz]

In the desktop version of TurboTax the Taxable IRA Distribution Worksheet is generally near or at the bottom of the list of federal forms in forms mode.  In all versions of TurboTax, it is part of the pdf that is generated when you select to print all forms and worksheets.

Until you explicitly enter a nonzero value, TurboTax assumes that your year-end value in traditional IRAs is zero.  Entering a zero into the previously blank field won't change the calculation.

[amit-mahajan12]

Thanks @dmertz. I found the Taxable IRA Distribution Worksheet, but for point 4 "Enter the value of all your traditional IRA(s) as of 12/31/2024 (including any outstanding rollovers from traditional IRAs to other traditional IRAs)" there's no value (it is blank) even though I have specified a non-zero value. This definitely seems like a technical issue. Do you know how I can reach out to TurboTax for it?

[dmertz]

There are two different areas where TurboTax ask for your year-end value in traditional IRAs, so you may need to enter it a seconds time.  If TurboTax is asking for it, enter it.

[amit-mahajan12]

Thanks again for the help so far @dmertz! The only place where I see this question is under Deductions & Credits > Traditional and Roth IRA Contributions. I checked Wages & Income > IRA, 401(k), Pension Plan Withdrawals (1099-R) but don't see the question there. Can you please suggest what's the second place I should look for?

[dmertz]

The one you posted appears to be for determining the taxable amount of your traditional IRA distribution on the Traditional IRA Distribution Worksheet and should be recorded on TurboTax's IRA Information Worksheet.  (It appears that TurboTax detects the missing value on the Traditional IRA Distribution Worksheet but does not detect the missing value that would need to be on Form 8606 line 6 if the Traditional IRA Distribution Worksheet is not being used.)  The other is for determining a penalty on an excess traditional IRA contribution and is recorded on TurboTax's 5329 form.  It's possible to have both situations on a tax return.

[amit-mahajan12]

@dmertz Right, so for my situation the one "for determining the taxable amount of your traditional IRA distribution on the Traditional IRA Distribution Worksheet and should be recorded on TurboTax's IRA Information Worksheet" is the one that is relevant, and it appears that even though I am entering the value correctly it is not reflecting on the Worksheet or on Form 8606, and thus the pro-rata rule isn't getting applied. It means I am not being taxed appropriately for my backdoor conversion of Traditional IRA to Roth IRA which is what I am concerned about. All the information you have provided is helpful and seems accurate, but the issue still remains that TurboTax is not using the value of my IRA as of the year end correctly.

[dmertz]

Perhaps @DanaB27 can identify the cause.

[DanaB27]

I like to take a look at your return. You can send us a “diagnostic” file that has your “numbers” but not your personal information. If you would like to do this, here are the instructions for TurboTax Online: 

1. From the left menu select Tax Tools. 
2. Then select Tools below Tax Tools. 
3. A window will pop up which says Tools Center.  
4. On this screen, select Share my file with Agent. 
5. You will see a message explaining what the diagnostic copy is. Click okay through this screen and then you will get a Token number. 
6. Reply to this thread with your Token number and add @DanaB27 . This will allow us to open a copy of your return without seeing any personal information.  

The instructions for TurboTax Download: 

1. On your menu bar at the very top, click "Online"
2. Select "Send Tax File to Agent"  
3. Click "Send"
4. The pop-up will have a token number
5. Reply to this thread with your Token number and add @DanaB27 . This will allow us to open a copy of your return without seeing any personal information.  

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution.

@amit-mahajan12 

[amit-mahajan12]

@DanaB27 Here's the number: 1306893

[DanaB27 · Accepted solution]

Thank you I reviewed your return. You entered the value in the IRA contribution area under Deduction & Credits but for Form 8606/ Taxable IRA Distribution Worksheet you need to enter it in the retirement income section. You need to continue after entering all Form 1099-Rs:

1. Click on "Search" on the top right and type “1099-R”  
2. Click on “Jump to 1099-R”
3. On the "Here's your 1099-R info" screen click "Continue"
4. On the "Tell Us the Value of Your Traditional IRA" screen enter the value on December 31, 2024.

@amit-mahajan12