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Turbo tax is not calculating the tax correctly on a backdoor roth conversion from a non deductable traditional IRA. How to fix this?

 
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4 Replies
MindyB
Employee Tax Expert

Turbo tax is not calculating the tax correctly on a backdoor roth conversion from a non deductable traditional IRA. How to fix this?

TurboTax can will calculate a backdoor Roth conversion correctly, but it is a 2 step process to input the information needed for this. To complete the backdoor Roth reporting, you must complete two separate sections (income and deductions).  You will need to enter the traditional IRA contributions you made in the deductions and credits section, ensuring you marked it as non-deductible if your income would otherwise allow you to take a deduction.  You'll then also enter the 1099-R you received to report the rollover- make sure you make the selection that you rolled all of it to a Roth.

 

To check if the Roth conversion worked as it should, here is how you can check: go to Tax Tools on the left of your screen, choose Tools, then View Tax Summary. On the left of the screen, select Preview my 1040, and check that line 4a show the full distribution and line 4b is either $0 or a small amount if you had earnings in excess of your contribution.

 

To review the steps in full to create a backdoor Roth conversion, here is a reference: How do I enter a backdoor Roth IRA conversion?

Turbo tax is not calculating the tax correctly on a backdoor roth conversion from a non deductable traditional IRA. How to fix this?

Turbo tax is not calculating the tax correctly on a backdoor roth conversion from a non deductable traditional IRA. How to fix this?

I followed those instructions and I can still see taxable amount calculated on 1040 when I go to tools to verify. I have tried starting from scratch several times to enter the amounts using these instructions, but no success. Any other suggestions for me?

Turbo tax is not calculating the tax correctly on a backdoor roth conversion from a non deductable traditional IRA. How to fix this?

@savasurao-mint post the dollars you contributed to the Trad IRA and how much was the conversion?  was there any money in the Trad IRA or was the balance zero prior to the contribution? 

 

THe instructions I posted work.  Just follow them very carefully. 

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