Backdoor Roth Conversions getting flagged as "excess contributions"

[baldietax]

In desktop the question flow after inputting the contribution is as follows, asks about non-deductible at the end...

Did you recharacterize any of the traditional IRA contributions for 2025 over to a Roth IRA contribution?

Are you covered by a retirement plan at work?

Did you contribute more money to this IRA than was allowed in 2024 or any previous year?

Did you have any nondeductible IRA contributions to your traditional IRA from 2024 or prior years?

Nondeductible contributions are tracked on Form 8606 in your prior year returns.

If you made any nondeductible contributions in prior years, look at your most recent Form 8606. Find the box called total basis and enter the number from that box below.

If you never filed a Form 8606 just enter 0 (zero).

What was your total basis as of December 31, 2024?

You have deductible traditional IRA contributions of $7,000.

You have the option of making all or part of your deductible IRA contributions nondeductible. Why do this? Although this would be uncommon, a possible advantage of this option is to make future IRA withdrawals tax-free. (Earnings on contributions while in the IRA will still be taxable at withdrawal.)

[wxlst6]

I have the same issue.

I'm using the online version, but I think the language is similar to the desktop version.

I opened a traditional IRA in 2025, and immediately converted to Roth IRA. In TurboTax, I saw 

Did you have any nondeductible IRA contributions to your traditional IRA from 2024 or prior years?
Nondeductible contributions are tracked on Form 8606 in your prior year returns.

I answered No.

After that, I answered some more questions. However, there is never a question about 2025 nondeductible selection. Therefore, I can't claim nondeductible for this backdoor conversion. Let me know if I missed anything. I think there is a bug in TurboTax.

Thanks.

[AnnetteB6]

In general, using the 'backdoor' method of putting money in a Roth IRA is used when income limits prohibit making the Roth IRA contribution directly.  Similarly, income limits and retirement plan coverage will prohibit making a deductible Traditional IRA contribution.  

If you are not allowed to make a deductible Traditional IRA contribution due to income limits, then you will never see a question about making your contribution non-deductible.  It is already a given that it will be non-deductible since a deductible contribution is not allowed for your circumstance.  If all or a portion of your Traditional IRA contribution can be deducted, then you are given the choice to make it non-deductible instead.

So if you are not allowed to make a deductible Traditional IRA contribution, the default is that it is automatically non-deductible.

@wxlst6 

[wxlst6]

Annette, thank you for your response.

We are on the same page that my 2025 traditional IRA was 100% non-deductible. Hence, the question remains on how to reflect this on Form 8606 to avoid being taxed. Right now, because TurboTax doesn't give me the option to claim non-deductible, form 8606 is wrongly generated, and I got taxed for this. For example, line 1 (Enter your nondeductible contributions to traditional IRAs for 2025, including those made for 2025 from January 1, 2026, through April 15, 2026. ) currently shows $0. However, the current amount should be what I converted from traditional IRA to Roth IRA. I still think there might be bug in current setup. Thanks.

[DaveF1006]

Here’s how to enter this in TurboTax

1. If you already entered your 1099-R, you still need to go back and enter the original contribution. Without this, Line 1 will stay at $0. 
2. Go to Federal, then Deductions & Credits. Find Retirement and Investments, and choose Traditional and Roth IRA Contributions.  Check the box for Traditional IRA.
3. Important: When asked if you “recharacterized” or “switched” the money to a Roth IRA, select NO. Many users choose “Yes” here, thinking it means a conversion, but recharacterization is a different tax action. Selecting “Yes” will erase your Traditional IRA basis.
4. Enter the amount of your 2025 contribution (for example, $7,000).
5. On the “Choose Not to Deduct” screen:  

• If your income is high, TurboTax may mark your contribution as non-deductible automatically.  
• If not, you’ll see the question: “Do you want to make this contribution non-deductible?” Select YES.

This step ensures the amount goes to Form 8606, Line 1.

1. Now that Line 1 has a value, you need to make sure the 1099-R (Wages & Income) knows to use that "basis" to offset the tax.
2. Go to Federal > Wages & Income > IRA, 401(k), Pension Plan Withdrawals (1099-R).
3. Edit your 1099-R. Ensure the box "IRA/SEP/SIMPLE" is checked.
4. Continue through the follow-up questions until you see: "Tell us if you moved the money through a rollover or conversion."
5. Select "I converted some or all of it to a Roth IRA."
6. On the subsequent screen, confirm "Any nondeductible contributions to your IRA?" is marked YES.

If this is entered correctly as noted, you should have amounts in Line 1,3,13 on the 8606 and 0 in Line 18, making this contribution non-taxable.

[wxlst6]

Hi Dave:

Thanks a lot! You instructions have drastically improved the result. I'm no longer being taxed for the conversion. Also, Form 8606 is in much better shape. I agree the key is to choose NO for "recharacterization". 

However, there is still a small problem with Form 8606:

Line 8 (Enter the net amount you converted from traditional IRAs to Roth IRAs in 2025. Also, enter this amount on line 16) is blank. However, it should have a value.

Line 11 is blank. This is due to Line 8 is blank. It should have a value.

Line 12 is blank. This is correct.

Line 13 has the correct value with an * next to it. This is a bit magic despite the fact that Line 11 is blank. (Line 13 is the sum of lines 11 and 12.)

Hopefully, you can shed some light on this small discrepancy. Thanks.

[DaveF1006]

The "missing" data on Lines 8-12 is usually not an error, but rather the software's way of following IRS Publication 590-B.

If your software uses the Taxable IRA Distribution Worksheet (based on Pub 590-B) to calculate your conversion, it often bypasses Lines 6 through 12 on the actual Form 8606.

Why it does this: If your basis (Line 5) is equal to or greater than the total amount converted, the math becomes a "short circuit." Instead of showing the work on the form, the software performs the calculation on a background worksheet and just "jumps" to the final result on Line 13.

The Asterisk (*): That little star next to Line 13 is the giveaway. It technically means: "Calculated using the IRS Publication 590-B worksheet instead of the lines above."

Even if those lines are blank, the form is valid and will be accepted by the IRS as long as the following is true:

Line 13 shows the correct non-taxable amount (usually your total contribution, e.g., $7,000).

Line 16 (in Part II) has the total amount you converted.

Line 18 (Taxable amount) is $0 (or just the amount of any interest/earnings).

If the three conditions are true, this 8606 is correct.

[lafriedmann4426]

Two things: 1) Are these instructions the same for online vs desktop, and 2) will there be a final complete version of these instructions? None of these has matched what I encounter when trying to record Roth conversion. 
This is the first year doing a Roth conversion.

[baldietax]

Folks should just be referring here, tho there is a small update still needed for desktop 1099R steps but just follow the on-screen questions.

https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-benefits/enter-backdoor-roth-...

@DaveF1006 @AnnetteB6 looks like this has been updated this week not sure all the changes, but the following for desktop still not matching the 2025 updates - things should actually be simpler as it looks like desktop has been updated to match online question flow.

7. Select I moved the money to another retirement account (or returned it to the same retirement account) on the What Did You Do With The Money From This Payer? screen.

8. Select I did a combination of rolling over, converting, or cashing out the money. Then, enter the full amount in the box next to Amount converted to a Roth IRA account and Continue.

[wxlst6]

Dave:

Thanks for the detailed explanation!

Lines 13, 16 and 18 are all checked out. I may save this for future reference.

[rk38]

I am looking for help with entering 1099-R for backdoor roth as well.  I made after tax contributions to traditional IRA and immediately converted to roth IRA (backdoor 🙂 ).  On 1099-R both line 1. Gross distribution and line 2a. Taxable amount show the full backdoor roth figure of $8000.00  Also, on 1099-R the "taxable amount not determined" box IS checked.  I had no funds in the IRA prior or after the backdoor roth transaction, and would expect the actual taxable amount to be $0.00 since this traditional IRA contribution was made with after tax dollars and immediately converted to roth.  However, when I enter $0 in turbotax I am getting an error message: "should not be zero if there is no prior year excess traditional IRA contribution on line 4 of the IRA Information Worksheet."

Any assistance/guidance would be greatly appreciated!

[baldietax]

just enter the 1099-R as stated don't change the taxable amount to zero it doesn't mean that's your final tax due.  There are supplemental questions after 1099-R entry where you can specify it was all converted to Roth.

Then the combination of the non-deductible IRA contribution and 1099-R will do the math on Form 8606 to determine the taxable amount is zero.

Follow these steps (with caveat a few steps for desktop referring to "What Did You Do With The Money From This Payer? screen." have still not been updated for the 1099R question changes - where it differs just follow what is on screen).

https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-benefits/enter-backdoor-roth-...

[rk38]

I had a question if this is considered converting $8000.00 using $0.0 of my own money since it was a non deductible contribution. I'm unsure of which option to select of the choices listed below. These are my options in turbotax online version to report roth conversion: 

Because $0.00 was withheld in taxes, you should only select Yes if you actually converted $8,000.00 using $0.00 of your own money.

Yes, all of this money was converted to a Roth IRA

No, I converted less than $8,000.00

Thanks for helping me figure this out. 

[baldietax]

so that verbiage about "your own money" is supposed to kick in if you did some withholding in the conversion.  it's a bit confusing but my guess is it's referring to case where tax is due on the conversion, withholding is made so the full amount doesn't get converted, but instead you send external money ("your own money") into your Roth within 60 days like a rollover, to make up the difference.  It's a way of having withholding on a Roth conversion to avoid estimated taxes and possibly a penalty, but still get the same outcome into the Roth.

anyway - I don't think it makes sense to show this when it's "$0" - I think you probably have a zero in Box 4 of your 1099-R instead of blank.  If you want to make this verbiage go away you can go back and blank out Box 4 instead of $0, but I don't think it matters.

Either way -  if you converted all 8000 to Roth you should say "Yes, all of this money was converted to a Roth IRA"

[rk38]

Correct, there is a $0 in box 4. I did put that $0 in turbotax as well.  I selected yes to converted all to roth. I also entered non deductible ira contributions elsewhere in turbotax when asked about IRA information. That seemed to generate a form 5498. Hopefully I did that correctly.  I did NOT list as recharacterization.