I contributed $1500 to a Roth in Apr 2016, but then realized I would be over the income limit. I recharacterized it ($1511 including earnings) to a trad IRA in Oct 2016.

[taxtax2017]

Then I added another $4000 to my trad IRA in Oct 2016, and converted $5495 back to my Roth  a few days later.  The way I have it entered into TurboTax, I owe a significant amt of tax, when I thought I wouldn't owe anything. Does anyone know why this is? Vanguard sent me a 1099-R for the trad IRA that shows a gross distribution of $5495 in box 1, taxable amt of $5495 in box 2a. For the Roth 1099-r it shows $1511 gross distribution in box 1 and $0 in the taxable amt in box 2.

[DexterS · Accepted solution]

I think you missed a step in entering the $5,500 for your wife.

Review these steps.

A Backdoor ROTH conversion consists of two parts. 

1.       The non-deductible contribution

2.       The non-taxable distribution

To record the non-deductible contribution in TurboTax Premier do the following:

• Federal Taxes >> Deductions & Credits >>Scroll Down to >> Traditional and Roth IRA Contributions
• Select >> Start/Update
• Traditional IRA and Roth IRA >> Select >> Traditional
• Did (Name) Contribute To a Traditional IRA  >> Select >> Yes
• Was This a Repayment of a Retirement Distribution? >> Select >> No
• Tell Us How Much You Contributed >> Fill In as appropriate >> Select >> Continue
• Did You Change Your Mind? >> Select >> No
• Retirement Plan at Work >> Select >> Yes/No
• Any Excess IRA Contributions Before 2016 >> Select >> Yes/No
• Any Non-deductible Contributions to (Name) IRA? >> Select >> Yes >> Select >> Continue
• Let’s Find Your IRA Basis >> Fill In as appropriate >> Select >> Continue
• Income Too High To Deduct an IRA Contribution >> Select >> Continue
• Choose Not to Deduct IRA Contributions >> Select >> Yes >> Select >> Continue
• Your IRA Deduction Summary >> Your IRA Deduction >> $0 >> Select >> Continue

Now we’ll report the Non-taxable distribution into the Roth

• Federal Taxes >> Wages & Income >> Select >> I’ll choose what I work on
• Scroll Down to >> Retirement Plans and Social Security >> IRA, 401(k), Pension Plan Withdrawals (1099-R) >> Select >> Start/Update
• Your 1099-R >> Select >> Yes >> Select >> Continue
•  Let Us Enter Your 1099-R >> Select >> I’ll type it myself >> Select >> Continue
• Tell Us Which 1099-R You Have >> Select >> 1099-R >> Select >> Continue
• Fill In as appropriate >> Select >> Continue
• Let Us Know a Little More About This Distribution >> Select >> From a Traditional IRA
• Is this IRA subject to an early withdrawal penalty >> Select >> No >> Select >> Continue
• Did (Name) Inherit This (Name) IRA? >> Select >> No >> Select >> Continue
• What Did You Do With The Money From Fidelity? >> Select >> (Name) moved the money to another retirement account >>
• Select >> (Name) converted all of this money to a Roth IRA >> Select >> Continue
• Move Funds? >> Select >> No (Name) left the money in the Roth IRA >> Select >>Continue

If all this is done correctly and you had NO deductible IRA contributions,  your form 1040, line 15b should be $0 and line 32 should be $0

[taxtax2017]

That was helpful, thank you!

[DexterS]

You are correct, if you made deductible contributions to your IRAs and then converted them to ROTHs in the same tax year it should be a wash. 

Click on the "Forms" button at the top of your screen.

Click on Form 1040 in the left-hand window.

If you made deductible contributions to your IRAs you should see your contributions on line 32.  My guess is that's where the problem is.

[taxtax2017]

Thanks for the response! It shows $12,506 for 15a. Wife did a backdoor Roth of $5500, I recharacterized $1511 from a Roth to a Traditional. And I contributed another $4000 on top of that to a traditional. Then I did backdoor for $5495 to a Roth. So I guess the $12506 is $5500 + $5495 + $1511.  Line 15B shows $5500. Line 32 is completely blank. So I'm still very confused. Our AGI is >$194,000 so if it considered non deductible?

[DexterS]

So, if I understand this, you made NO deductible IRA contributions because your income was too high.  The $5,500 should not be showing on line 15B because didn't deduct that money, and it was NEVER deducted from a tax return.  If I've correctly described your situation see my answer below.