Why is my Roth IRA contribution lowering my Federal refund?

[AnnetteB6]

You are probably not eligible to make a Roth IRA contribution due to your income and the result is that you are being charged an additional tax for an excess contribution.  This would lower your refund.

Go back through the section of your return where you entered the Roth IRA contribution and pay close attention to the messages on the screen.  If you are making an excess contribution, there will be information on the screen to tell you the consequences and how to remedy the situation.

To learn more, take a look at the following TurboTax help article:

What if I made an excess Roth IRA contribution because my income is too high?

If you need extra time, filing an extension by April 15, 2026, moves your submission deadline to October 15. But remember any taxes owed are still due in full by the original April 15 date.

[camering3]

First of all Thanks for the response Annette, I think I have figured out what happened but now have a different question. I actually did a back door Roth conversion in 2024 and reported the amount of the original IRA conversion amount as taxable, so either I did not properly report it when I filed last year (form 5498) OR the system is not recognizing that this is a back door Roth now. So, do you know how I might correct this now?

Thanks again!

Charlie

[AnnetteB6]

Based on the information you have shared, this could be the situation.  If you made the non-deductible Traditional IRA contribution either in 2024, or for 2024, then that contribution should have been reported on Form 8606 to capture the basis for your Traditional IRA.  Based on the statement that the Roth conversion is being taxed, this step may have been missed.

Once the basis (amount of non-deductible contribution to the Traditional IRA) is entered into your return, the conversion to the Roth IRA will not be taxable.

Take a look at the following TurboTax help article for the steps used to report a backdoor Roth IRA conversion.  Toward the end of the article there is information about what to do if your 2024 tax return did not contain Form 8606 to report the basis of the Traditional IRA.  Follow those steps to get Form 8606 filed and enter the basis into your 2025 tax return to correct the situation.

How do I enter a backdoor Roth IRA conversion?

If you need extra time, filing an extension by April 15, 2026, moves your submission deadline to October 15. But remember any taxes owed are still due in full by the original April 15 date.

@camering3