For 2023, I just received a 1099-R for it because during the year, I accidentally contributed $5000 to an IRA, then converted it right away to a Roth IRA. My tax went up after entering the 1099-R into T-tax for the $5000, even though it's techically after-tax dollars since I not claming a deduction for the traditional IRA that $5000 was in.
Can someone suggest if/how my next cousre of action would be to avoid paying taxes on that 1099-R? I've read something about filling out form 8606, but it's a little confusing and Turbotax isn't leading me in a clear direction here.
Thanks!
Hi, yes I went all the way through the flow where it seems like it's ready to file it--except I didn't seem to get any pages or questions that asked or implied about whether my IRA contribution (before it was soon converted) was non-deductible or deductible, so I still have the extra tax added on to my total after adding the 1099-R. 🤔
To start over, delete the 1099-R
Tell TurboTax you made a contribution of $5,000 to a Traditional IRA, and you elect to make it non-deductible.
Then enter the 1099-R again.
That will put the $5,000 on Line 4a to make the IRS happy.
Line 4b should be zero.
If it doesn't work, contact TurboTax Support for assistance.
Yea thanks, I tried that but it didn't work.
I entered the $5k IRA into Turbotax…my tax owed went up slightly right away for some reason.
I then entered all the info for the IRA, then it told me “Income Too High To Deduct an IRA Contribution”, so forced me into making it non-deductible, and showed me I’m over the limit of $136k AGI, even though I’m married filing jointly, where that limit is much higher.
I then tried entering my 1099-R that shows my conversion, and it just added more tax even though I’m sure I entered all the questions right.
It's getting hairy, I will try to speak to someone at turbotax.
You essentially did a back door Roth IRA conversion. Here is a TurboTax help article that will take you through this situation step-by-step.
How do I enter a backdoor Roth IRA conversion?