Traditional IRA after tax dollars to ROTH IRA double taxation

[tcomkumar]

I did a Traditional IRA contribution using after tax dollars of $7000 and converted all of that to ROTH IRA immediately in Jan 2024. When I entered 1099-R, even though marked as non deductible for filing 8606, I am getting taxed for this $7000. I am kind of double taxed for this. This is the first time I am filing 8606. How to do it claim the tax refund for this?

[DanaB27 · Accepted solution]

To clarify, you made the contribution in 2024 and converted it in 2024? 

To confirm you have a $7,000 entry on lines 1, 3, and 5 of Form 8606? The conversion shows up on line 8?

Can you verify if you checked the IRA/SEP/SIMPLE box on your Form 1099-R entry?

Did you have pre-tax funds in your traditional/SEP/SIMPLE IRAs (value on December 31, 2024 not $0)? If yes then the pro-rata rule applies. This means that with each distribution/ conversion you will have a taxable and nontaxable part. 

Please see How do I enter a backdoor Roth IRA conversion? for additional information.

[tcomkumar]

Thanks for the response @DanaB27 . I figured out the problem after seeing 8606, I had wrongly entered 7000 as recharacterization which is not valid for ROTH conversion. After fixing this to 0, tax to be paid was looking ok. 8606 form also looks ok now.