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New Member

Why is my back door contribution being taxed?

Back in 2017, I was regularly contributing to my roth ira, but when I went to do my taxes I realized that my income was too high due to some stock transactions I did during that year.  I called vanguard to have them convert the money to a Traditional IRA before converting back to a Roth.  For the Roth 1099-r form, there's an amount of approximately 2k with the code of N and an amount of 3k with the code of R.  For the Traditional IRA 1099-r form, I contributed to the traditional account (in order to max out) before converting all of it to Roth IRA.  The code for that transaction was 2, and when I check that the entire amount was converted to a Roth IRA using the software, my federal tax owed goes up by about $1500.00.

As an aside, I did contribute the maximum allowed to my Roth IRA for 2018 as well without the backdoor.  My income without the stock transaction is below the threshold.

Please help me understand whether I am filling out the forms incorrectly or if my ROTH IRA contributions were not done correctly and now I just owe money.

Thanks.

1 Reply
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Level 2

Why is my back door contribution being taxed?

If you are being taxed on your Back Door Roth IRA, you most likely have entered the information incorrectly.  They have to be entered perfectly following the instructions at the link below.  I would suggest deleting all your entries and trying again.

https://ttlc.intuit.com/replies/6768029