What's wrong with this Turbotax? I've copied example for backdoor Roth conversion exactly and it says traditional distro is taxable but I had no prior traditional.

[sheirich01]

I'm over 55.  Stood up new Traditional with $6500 after-tax money.  Never had Traditional before.  Converted to Roth as soon as I could, about 2 weeks.  No growth of the $6500.   I've followed the example posted here from previous years on how to do this but Turbotax is still showing the $6500 as "taxable amount" on the Form 1040 worksheet.

[macuser_22]

Nothing is wrong with TurboTax .     You probably failed to enter the $6,500 contribution  in the IRA contribution section and mark it non-deductible.

If it was a 2019 contribution made *in* 2019 before Dec 31, 2019 then it should be on line 1 of a 8606 form and will be used to offset the tax in the line 6-8 calculations.

[HOWEVER, if it was a 2019 contribution made *in* 2020 *for* 2019 then it will also be on the 8606 line 4 that will exclude it for any 2019 conversion because it can only be applied to conversions made in 2020 and later.  While you can make 2019 contribution up to Apr 15 2020, the  non-deductible "basis" cannot be applied retroactively to the prior year.  You also cannot convert retroactively so if the conversion was done in 2020 the  you must report in on yiu 2020 tax return next year.]

[macuser_22]

This is my 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  If you do, then the non-deductible part must be spread over ALL accounts and cannot be withdrawn by itself.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 2019 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 2019.     (Usually zero unless you also made a 2018 or earlier non-deductible contribution. If you do have prior year basis then enter the last filed 8606 line 14 value.).

Enter the 2019 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 2019, 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 4a of them 1040 form and a zero taxable amount on line 4b if you did it right.

Also see this TurboTax FAQ:
https://ttlc.intuit.com/questions/4350747-how-do-i-enter-a-backdoor-roth-ira-conversion