Hi, I received a 1099-R for a backdoor Roth conversion. If I enter the info, I am being taxed on the full amount. Is there a way to indicate that it was re-invested?

Forum|Forum|7 years ago
June 4, 2019
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TurboTax Self Employed Online

Best answer by macuser_22

A backdoor Roth is two separate transactions. A non-deductible contribution to a Traditional IRA.

And a distribution from the Traditional IRA converted to a Roth.

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 If you do, then the non-deductible part must be spread over ALL accounts and cannot be withdrawn by itself.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 IRA and ended up with a zero amount in ALL Traditional IRA accounts will this Roth conversion not be taxable.

First you must enter your Traditional IRA contributions (if there were 2016 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 2016. (Usually zero unless you also made a 2015 or earlier non-deductible contribution).

Enter the 2016 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
http://thefinancebuff.com/how-to-report-backdoor-roth-in-turbotax.html

macuser_22

Answer

Alumni - Champ

A backdoor Roth is two separate transactions. A non-deductible contribution to a Traditional IRA.

And a distribution from the Traditional IRA converted to a Roth.

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 IRA and ended up with a zero amount in ALL Traditional IRA accounts will this Roth conversion not be taxable.

First you must enter your Traditional IRA contributions (if there were 2016 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 2016. (Usually zero unless you also made a 2015 or earlier non-deductible contribution).

Enter the 2016 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
http://thefinancebuff.com/how-to-report-backdoor-roth-in-turbotax.html

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

F

freedom_1

Level 2

Unfortunately this does not work for the very situation someone else asked about.

A person John Smith - makes a nondeductible Trad IRA contribution of 6000 in the year 2020 for year 2019

Same person John Smith - makes a nondeductible Trad IRA contribution of 6000 in the year 2020 for year 2020

Before the end of 2020, $12000 is converted to ROTH IRA

This person receives a 1099-r in 2021 for 12000.

There's no way to enter this in Turbotax without incurring either a state or a federal (or both) level tax increase

macuser_22

Alumni - Champ

@macuser_22

Yes you are right and I do have form 8606 for 2019.

But my 1099-R issued to me in 2021 for the year 2020 has the cumulative sum of 12,000

You are also right that one would have to amend the tax return to show form 8606

@freedom_1 wrote:

@macuser_22

Yes you are right and I do have form 8606 for 2019.

But my 1099-R issued to me in 2021 for the year 2020 has the cumulative sum of 12,000

You are also right that one would have to amend the tax return to show form 8606

Then just what problem are you having?

The 2020 non deductible contribution entered into the 2020 IRA contribution interview should produce a similar 2020 8606 with the 2020 $6,000 on line 1 and the 2019 $6,000 contribution entered in the 1099-R interview would put the 2020 $6,000 on the 8606 line 2 for total of $12,000 on line 3 to offset the tax of the $12,000 conversion (assuming a year end Traditional IRA value of zero).

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**