Backdoor Roth IRA contribution

[bsluder68]

This was a great answer for the first part of the process, but not the second part of the process.  After doing the step "Enter “1099-R, distribution from an ira” in the search box located in the upper right corner of the program and initiate the search." there is nothing to jump to in TurboTax 2017 for the second step.  Where should the "jump" be taking me?

[macuser_22]

Here is my backdoor Roth procedure:

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  If you do, then the non-deductible part must be spread over ALL accounts and cannot be withdrawn by itself.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...>

[bsluder68]

I answered my own question.  I left the Deductions & Credits section and went to the Wages & Income Section.  Within there then to the Retirement Plans and Social Security and the IRA, 401(k) section.  I was able to follow the second part of the process in the original answer from there.

[russellpsi]

Having trouble apply my situation from the above. I made 2017 traditional IRA contribution in year 2018 prior to April 2018 and also then directly converted to Roth soon after. Does the second process of claiming the Roth conversion going on my 2018 tax return (myunderstanding is conversions are followed by the calendar year they are "in" according to finance buff articles. So do I just stop at 11st step and leave second step proceed for 2018 tax return?

[russellpsi]

After*

[russellpsi]

Should read : After 1st step*

[macuser_22]

@russellpsi
1) You claim the the 2017 contribution made *in* 2018 *for* 2017 on your 2017 tax return as a non-deductible contribution. That will produce a 8606 form with carry forward basis  on line 14.

2) You claim the 2018 contribution next year on your 2018 tax return also as a non-deductible contribution that will go on line 1 of a new 2018 8606 form.  The 2017 carry over from the 2017 8606 line 14 will go on line 2 to and the total of both on line 3.

3) You will get a 2018 1099-R reporting the distribution that you rolled to a Roth, assuming that it was the total of both contribution plus any earnings and the Traditional IRA ended up with zero value, the two non-deductible contributions would offset the distributiin, leaving only any earnings as taxable income.

[russellpsi]

Thank you! Perfect help!

[mytrisingh]

Following the Turbo Tax Traditional Contribution guidance (steps 3 onward) results in pages on Turbo Tax that don't correspond to the guidance.  The Backdoor Roth should be covered better in the Turbo Tax questionnaire.  The IRS contacted us last time even though it was done correctly.

[pixelrogue]

This appears to have changed for 2018 tax return in TurboTax. Anyone w/the steps outlined?

[joe-baccash]

Bogo, the financebuff link above has been updated for 2018. Quite a helpful walkthrough.

TurboTaxAnnetteB, I've followed these steps to a T for both myself and my wife but my 1040 preview is still showing my full contribution/conversion as taxable. I tried and re-tried this and can't seem to get that taxable line to zero out. Anything else I should try? Thank you.

[robin-n-stevenso]

Thank you, this saved my marriage, lol 🙂

[Randal]

some mix up-----  just want to get my taxes done,  I have moved from fla. to Tx. and have used Turbo Tax for several years.

[toddd]

@AnnetteB 

Preface: I realize I jumped without looking or thoroughly researching backdoor Roth contributions.

In 2018, I made after tax contributions to my Traditional IRA for the first time and converted them to a Roth. This was done after I filed so I am filing an amended return now (trying) using TurboTax. Since my contribution was made after 12/31/2018 and converted before 4/15/2019 so I didn't receive a 1099-R until now (for 2019). TurboTax is generating an 8606 but shows no tax liability for 2018 with a future basis of $5,500 and there doesn't seem to be a way to enter information from my 5498 form (other than by overriding).

1.  Does this sound like it is this calculating correctly?

Just because I thought this was such a great idea (see preface), I made another after tax contribution ($6,000) after 4/15/2019, for 2019, and converted that as well.  I received a 1099-R for 2019 that shows both contributions ($11,500 total). 

2.  How do I incorporate/account  for this information in TurboTax for my 2019 filing?

Epilogue:  I have since rolled the entire balance (but not until 2020) of my traditional IRA into my employer's 401k (they allowed since was originally a roll over from a previous employer).

[macuser_22]

---

@toddd wrote:

@AnnetteB 

Preface: I realize I jumped without looking or thoroughly researching backdoor Roth contributions.

In 2018, I made after tax contributions to my Traditional IRA for the first time and converted them to a Roth. This was done after I filed so I am filing an amended return now (trying) using TurboTax. Since my contribution was made after 12/31/2018 and converted before 4/15/2019 so I didn't receive a 1099-R until now (for 2019). TurboTax is generating an 8606 but shows no tax liability for 2018 with a future basis of $5,500 and there doesn't seem to be a way to enter information from my 5498 form (other than by overriding).

1.  Does this sound like it is this calculating correctly?

Epilogue:  See preface. I made another after tax contribution ($6,000) after 4/15/2019, for 2019, and converted that as well. 😪

I now have a 1099-R for 2019 that shows both contributions ($11,500 total). 

2.  How do I incorporate/account  for this in TurboTax for my 2019 filing?

---

You should have filed a 8606 form with your 2018 (or need to file a stand alone 8606 now for 2018) that reports your 2018 non-deductible contribution and the carry forward basis in box 14.

Be sure to enter your 2019 contribution in the IRA contribution section and specify that it is to be non-deductible (if that question comes up).    When entering the 2019 1099-R the follow-up question after the 1099-R summary screen will ask of you tracked the non-deductible basis and then ask for your prior contributions - enter the box 14 amount from the 2018 8606.   Then enter the total value of ALL Traditional IRA accounts as of Dec 31, 2019.    The 2019 contribution will be automatically put on a new 8606 form line 1 and the 2018 basis on line 2 so that both years are accounted for on the new 8606 that calculated the taxable  & non-taxable amount.