How do I enter a Backdoor Roth IRA contribution?

[jeffjunk1999]

Traditional IRA contribution was non-exempt.

[PaulaM · Accepted solution]

Doing a "backdoor Roth" in TurboTax is a 2-step process. Be certain to enter your basis before entering any 1099-R. Follow the steps below in the order given, for the desired outcome.

First, select in your open return, My Account>Tools>Topic Search. Type traditional IRA and GO. Enter the contribution to the Traditional IRA (TIRA) that you made. This is not a characterization. Select No on the page, Did You Change Your Mind? Depending on your income and if you have a retirement plan at work, TurboTax will either tell you that your contribution is not deductible or it will ask you "Do you want to make your IRA contributions nondeductible?" Select Yes.

Once TurboTax knows that your TIRA contributions are nondeductible (that is, you have a basis in your TIRA), then enter your 1099-R.  Select My Account>Tools>Topic Search. Type 1099r and GO. For a Roth conversion, the 1099-R usually has a Distribution Code 2 in Box 7. That means it is an early distribution but an exception applies so there is no penalty.

To check that the right results show, look at your 1040 form. Select My Account>Tools>View Tax Summary. Then select the gray Preview my 1040 from the top of your screen. There should be no entry on Line 32 for IRA deduction. The Box 1 amount from your 1099-R should appear on Line 15a of your 1040, but Line 15b should be zero.

[nfeemster2]

I am finally doing my 2016 taxes and it's my first year using Turbotax. When I entered my 1099-R from my backdoor Roth conversion, my refund went down so I realize I need to enter the TIRA contribution I made so Turbotax recognizes I have basis. However, when I follow the instructions above, I am prompted to enter my TIRA contributions for 2016, not 2015. How can I tell Turbotax that the contribution was made *for* the 2015 tax year? That contribution and the conversion were both made in early 2016. Thank you.

[dmertz]

nfeemster2, a traditional IRA contribution made for 2015 goes on your 2015 tax return.  If you did not already report it on your 2015 tax return, you must amend your 2015 tax return to add it.  If nondeductible, 2015 TurboTax will prepare 2015 Form 8606 to report the nondeductible traditional IRA contribution for 2015.  The amount on line 14 of your 2015 Form 8606 will then carry to line 2 of your 2016 From 8606 to be applied in calculating the taxable amount of your 2016 Roth conversion that you will report by entering the 2016 Form 1099-R into 2016 TurboTax.

[Taxpaul-EA]

5498 should be received for both 2015 and 2016 from the brokerage firm.

[waifungsit]

So in order to do this in Turbotax, it is recommended to fill out a 1099R first and NOT an 8606?

[macuser_22]

TurboTax automatically produces the 8606 when the non-deductible contributions are entered in the IRA contribution section and the 1099-R is entered in the 1099-R retirement section.

[macuser_22]

This is a 2 year old post and the TurboTax interface is probably different now.  If you have more questions I suggest using the "Have a new question?" box on this screen and ask a NEW question.  Almost nobody will see a comment on a 2 year old post and give you an answer.

[waifungsit]

Thank you. Can you tell me the process on how to start a Back Door ROTH? 1. Open a TIRA with Vanguard. 2. Open & transfer funds to a ROTH IRA in Vanguard. Is this right?

[kc_kc]

I agree with macuser_22 because online turbo tax is asking more questions than what original posted. It could be great if this post is updated based on 2017 version

[macuser_22]

This is a 2 year old post:

It works basically the same way for 2017.  Non-deductible contributions offset taxable conversions.  Both must be entered.

This so-called “back-door Roth”  method ONLY works if you have NO OTHER Traditional IRA accounts.  If you do, then the non-deductible part must be spread over ALL accounts and cannot be withdrawn by itself.  Only if you started with NO Traditional, SEP & SIMPLE IRA and ended up with a zero amount in ALL Traditional, SEP & SIMPLE IRA accounts will this Roth conversion not be taxable.

First you must enter your Traditional IRA contributions (if there were 2017 contributions).

IRA contribution
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),,
Retirement & Investments,
Traditional & Roth IRA contribution.

Be SURE to answer the follow up that the are choosing to make this contribution NON-DEDUCTIBLE - if that screen comes up. (DO NOT say that you moved (recharacterized) the money to a Roth) – this is a conversion, not a recharactorazition.

Then enter the 1099-R that shows the distribution.

Federal Taxes,
Wages & Income
I’ll choose what I work on (if that screen comes up),,
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

 Answer the follow-up questions answer the question that you moved the money to another retirement. The screen will open up with choices of where it was moved.  Choose you converted it to  Roth IRA.

When asked if you have made any non-deductible contributions say " "yes" if you did then enter the non-deductible contributions made for tax years before 2017.     (Usually zero unless you also made a 2016 or earlier non-deductible contribution).

Enter the 2017 year end value of your Traditional IRA a "0" (zero) - if it is in fact zero - this tax free Roth conversion will not work if it is not zero.

[If you had any other Traditional IRA at the end of 2016, then the nondeductible "basis" must be pro-rated over the current distribution and the total IRA value and only a portion of the Roth conversion will be non taxable and part will be taxable, with the remaining non-deductible basis carrying forward for future distributions.  You can never only withdrew the nondeductible basis as long as the IRA exists and has a value more than zero.]

The non-deductible amount of your contribution will be subtracted from the taxable amount of the conversion on then 8606 form and enter on line 15a of them 1040 form and a zero taxable amount on line 15b  if you did it right.

Also see this website that has some screenshots of the procedure
<a rel="nofollow" target="_blank" href="http://thefinancebuff.com/how-to-report-backdoor-roth-in-turbotax.html">http://thefinancebuff.com/ho...>