Roth IRA Basis shows blank in Turbotax after Backdoor Roth IRA conversion

[AJ223]

I contributed to a traditional ira in 2020. I did a conversion of all my Traditional IRA balance over the years into Roth IRA in 2020. Conversion resulted some taxable amount and I filed taxes in 2021 including that as income. I also contributed to traditional ira in 2021 and did a backdoor roth ira conversion immediately after contribution as I heard backdoor roth conversion cannot be done starting 2022. While filing my 2021 taxes I noticed that all my Roth IRA basis is gone in TurboTax.

How can I get back all the Roth basis of the contributions and conversions over the years back in TurboTax?

How do I determine the Roth IRA basis for the Traditional to Roth converted amount that has basis and taxable component?

[DanaB27]

You stated that you converted the full balance of the traditional IRA in 2020, therefore you would not have any basis carried over to 2021. 

It is an excellent strategy to empty the traditional IRA before starting a backdoor Roth.

Please follow the steps below to enter your 2021 nondeductible contribution and conversion.

To enter the nondeductible contribution to the traditional IRA:

1. Login to your TurboTax Account 
2. Click on "Search" on the top right and type “IRA contributions”
3. Click on “Jump to IRA contributions"
4. Select “traditional IRA”
5. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
6. Enter the amount you contributed
7. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
8. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contributions before this tax year.
9. If you had a basis in the Traditional IRA before then enter the amount.
10. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (if you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible).

To enter the 1099-R distribution/conversion: 

1. Click on "Search" on the top right and type “1099-R”
2. Click on “Jump to 1099-R”
3. Click "Continue" and enter the information from your 1099-R
4. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
5. On the "Your 1099-R Entries" screen click "continue"
6. Answer "yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
7. Answer the questions about the basis from line 14 of your 2020 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

[AJ223]

Thank you for this quick response and certainly that answers how I should report the roth conversion for federal taxes.

My original post/question is about Roth IRA basis. Over the years I made non deductible contributions to Traditional and Roth IRAs. I also tracked basis for both Traditional and Roth IRAs using TurboTax. After the conversion the Traditional IRA basis should be zero/blank. I understand and that seems to be fine. My question/concern is the Roth IRA basis that was there before the conversion seem to be lost in TurboTax.

After the conversion is it right to assume the full converted amount (basis and taxable amount) should be added to my prior Roth IRA basis?

I also noticed TurboTax does not seem to automatically apply the Traditional IRA basis while calculating the taxable part of the converted amount for MA state taxes. I just noticed this issue with my 2020 state filing. Looks like I need to file a state amendment to get back the additional taxes I paid.

As I did backdoor roth conversions multiple times over multiple years what should I be entering for the following 2 MA state tax questions?

Total contributions previously taxed by Massachusetts (assume I should enter the Traditional IRA basis here)

Total distributions received in previous years (what does it mean by previous years? Since I am filing taxes for 2021 should it be for years 2020 and before? Should I enter the Roth conversion distributions from 2020 or nothing at all?)

I think Turbotax MA state return product/software should be fixed to take into account Traditional IRA basis automatically just like Federal return is doing.

[DanaB27]

You will have to keep track of the contributions and conversions separately because of the Ordering Rules for Distributions. If your previous contributions prior to 2021 to the Roth got deleted, then you can enter them again under IRA contribution:

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA” (you will have Roth and traditional IRA checked)
4. Continue through the question until you get the “Let’s track your Roth basis” screen, answer “yes”.
5. On the “Enter Prior Year Roth IRA Contributions”

Yes, enter all your contributions to the traditional IRA for “Total contributions previously taxed by Massachusetts” since the traditional IRA contributions are not deductible in MA.

Yes, it will be contributions from prior to 2021. If the distribution from 2020 was the only one then you will enter that amount.

@AJ223