Backdoor Roth Conversions getting flagged as "excess contributions"

[baldietax]

5498 is something your brokerage will send in May not sure where you are seeing that on Turbotax, but the key form to look at in your return is Form 8606.

if you didn't have a basis in the IRA to begin with or balance in the IRA at year-end, you should see your $8000 on lines 1,3,5,8,13,16,17; and $0 on lines 14, 18 and $0 on your 1040 Line 4b.

[rk38]

How do I find the form 8606 in the on line version. I don't see it in the tools menu.  I can access the 1040 through the print menu. Will 8606 be visible in the 1040?

[baldietax]

you will need to get the PDF version of your return which is available once you've paid for the s/w.  I usually use desktop but believe it's under Tax Tools / Print Center.

[rk38]

Thank you very much for all your help!

[csmillerak]

I have same issue

[RogerD1]

If you made Roth contributions because of income limitations, those will get flagged as "excess contributions"

You can make traditional IRA contributions regardless of income, however, some or all of the traditional IRA contribution may not be deductible on your tax return.  If that is the case, this is where a Backdoor Roth conversion can come into play to convert the traditional IRA contribution to a Roth contribution.  If your traditional IRA contribution was fully non-deductible, a complete conversion to a Roth using the Backdoor Roth conversion will not change your taxable income or tax liability.

Following is a help article from TurboTax on how to report a Backdoor Roth in TurboTax.

[calo45487]

I have followed the instructions 5 or 6 times now it is not working.  It does not show in my 1040 previous 4b as zero.  There is an error in the instructions.  How do i get help?

[baldietax]

@calo45487 if you share more details here someone can likely help... how much did you contribute, how much did you convert, did you have any basis carried forward from 2024, did you have a balance left in the IRA as of 12/31/25, how much is on 1040 4b and what is happening on your Form 8606.

if 1040 4b is a partial amount of the conversion that is taxable that implies you had pre-tax earnings in your IRA so the conversion has been taken from both pre-tax and non-deductible funds.

as long as you've input the contribution in the IRA section and identified it as non-deductible if given the option, I would say the most common cause of problems reported here is the identification of the 1099-R as a conversion not a rollover, or missing those questions, after you input the 1099-R you will get a summary of the 1099-Rs and need to hit the button to move forward to answer the questions about the 1099-Rs.  Make sure to enter the 1099-R as is; you should have amounts in Box 1+2a, "taxable amount not determined" checked, Box 7 distribution code = 2, IRA/SEP/SIMPLE checked.

[jj34]

I clicked the "recharacterization" button before reading this discussion and of course got flagged for excess contribution to my IRA. Now I can't "unselect" by revisiting the topic on the online version of TurboTax. What should I do? 

[RogerD1]

If you go back to the Deductions and credits section and then click Revisit for Traditional and Roth IRA Contributions in the Retirements and Investments category, you'll get a screen "Tell us about your IRAs".  You can unselect the check box (or boxes) for the Traditional IRA contribution, then Continue.  You'll get a pop-up asking if you are sure you want to delete this contribution and you select Yes and that will delete that information.  You can then go back and revisit the IRA contribution section and re-enter the contribution and mark that you did not recharacterize the contribution.

[deekeoski]

When you refer to a W-2 and contributions exceeding earned income does that apply to the backdoor conversions? I am retired, but I have a part time job where I made $19K last year. It's essentially volunteering. I am getting flagged by Turbotax for the Roth IRA conversion as being an excess contribution. Can you help me understand?

[baldietax]

@deekeoski yes it applies to the contribution part of the Backdoor Roth process, see IRS Pub 590a for definition of compensation 

https://www.irs.gov/pub/irs-pdf/p590a.pdf

General Limit

For 2025, the most that can be contributed to your traditional IRA is generally the smaller of the following amounts.

• $7,000 ($8,000 if you are age 50 or older).

• Your taxable compensation (defined earlier) for the year.

But if you have 19k in compensation presumably that would cover the contribution.  If your compensation was on 1099-MISC but you didn't designate it as earned income (which may trigger Schedule C), that might be a problem.

The other common problems folks have reported here have been misunderstandings or errors - for example:

1. confusing a higher conversion amount on 1099-R with the contribution amount.  Think of 'Backdoor Roth" as just a nickname for 2 separate transactions; contributions are limited and can be backdated to prior tax year until 4/15; conversions are limited only by your Trad IRA balance and cannot be backdated they are reported in the calendar year of conversion.  In some cases folks make prior year and current year contributions and convert the entire amount all together (e.g. 2 x 8k contributions + 16k 1099-R), or maybe have a delay doing the conversion and some earnings to convert, so the 1099-R is higher than a single year contribution, which is fine - but the Trad IRA contribution should only be recorded for the amount of the contribution made for that tax year.

2. Inputting the contribution and then incorrectly responding to the questions about Roth recharacterization (not to be confused with a conversion), which reclassifies the contribution against the Roth and therefore in excess of the Roth contribution limit.  The Trad IRA contribution section be answered as tho the only thing that happened was a Trad IRA contribution; entry of the 1099-R will record the conversion step separately.

Hope this helps - if you post more details of your situation maybe someone here can help further.

[ksangler]

The instructions for the desktop backdoor Roth do not align with what I'm seeing in the interview steps.  the top half (before TTax Online) second bullet, it seems we should only enter the non-deductible portion this year and need to wait for the 2026 1099-R to finish this process.  But the desktop interview does not indicate that.

Then jumping to your Desktop instructions, step 6 is incomplete.  There are a whole bunch of questions to go through and then there is not a "deductible contributions elected non-deductible box" in my interview steps.  You may be referring to form 8606 and not the interview.  All the non-deductible questions in the interview apply to 2024 (or prior) non-deductible contributions and not one for the 2026 $ intended for 2025 tax year.  Finally, It may be helpful if the paragraph that starts "If your conversion contains contributions made in 2025 for 2024", that you include a similar statement for those of us who want to make a 2025 non-deductible contribution in 2026.  I believe if I substitute 2026 for 2025 and 2025 for 2024 in that paragraph, I read that to mean that filing form 8606 for the 2025 tax year is required to establish the cost basis in 2025 for nondeductible IRA contributions that were made between Jan 1 and Apr 15 2026.   Does that makes sense?  Thank you. Ken

[MarilynG1]

Basically, a Back Door Roth is a two-step process.  First, enter the Non-Deductible Contribution.  Then, report the 1099-R and say Yes, converted to Roth.  You may want to delete your previous entries (or forms) and if you're using TurboTax Online, clear your Cache and Cookies.  Then step through those interview sections again.

Here's more detailed instructions on How to Enter a Back-Door Roth Conversion.

@ksangler 

[baldietax]

@ksangler for sure the instructions do not list every single question, but follow the on-screen questions.  For sure it could be written better but want to make sure no misunderstanding on these points:

"the top half (before TTax Online) second bullet, it seems we should only enter the non-deductible portion this year and need to wait for the 2026 1099-R to finish this process.  But the desktop interview does not indicate that." - the desktop interview is asking you for contributions you made for 2025 (Step 1) and 1099-R's you received for 2025 (Step 2 under Wages & Income).  If you did a split-year backdoor and did the contribution for 2025 before 4/15/26 you will not have a 1099-R to enter until next year. 

"All the non-deductible questions in the interview apply to 2024 (or prior) non-deductible contributions" - yes, this is to correctly record the basis carryover from 2024 to 2025 on 8606 Line 2.  Your 2025 contribution to that basis is handled separately as the earlier question about contributions which goes to 8606 Line 1.  The two add up on Form 8606 to your total basis on Line 3.

"If your conversion contains contributions made in 2025 for 2024" refers specifically to checking that you filed 8606 correctly for the 2024 tax year when you filed last year.  Yes you can substitute for 2025/6 for 2024/5, but that 8606 filing process is what you are doing in Step 1 of this guide.