topic Why am I Getting taxed for the whole amount of nondeductible IRA contribution converted to Roth IRA? in Get your taxes done using TurboTax

Why am I Getting taxed for the whole amount of nondeductible IRA contribution converted to Roth IRA?

1099bn — Mon, 10 Feb 2025 23:16:37 GMT

I made annual nondeductible contribution to traditional IRA $8000, and converted to Roth IRA in Turbo Tax 2024. The base is zero both at end of 2023 and end of 2024. Turbotax taxes the entire amount of $8000 even it is after tax contribution. There is no 8606 form generated. Why?

I did exactly same for 2023 and Turbotax didn't tax me for the conversion amount and generated Form 8606 correctly.

Re: Why am I Getting taxed for the whole amount of nondeductible IRA contribution converted to Ro...

MarilynG1 — Mon, 10 Feb 2025 23:26:42 GMT

You need to first enter the non-deductible IRA contribution, otherwise the Roth contribution is fully taxable. After entering your 1099-R, continue through the follow-up questions until you reach Choose Not to Deduct IRA Contributions.

Here's details for How to Enter a Back-Door Roth Conversion.

Re: Why am I Getting taxed for the whole amount of nondeductible IRA contribution converted to Ro...

1099bn — Tue, 11 Feb 2025 00:39:44 GMT

Thanks a lot.

BTY The Congress has nothing better to do to set a limit for direct Roth contribution, and then provide a back door so everybody (if you are lucky to know) can get around it. It does not make sense to have the limit in place! What a waste of time!

Re: Why am I Getting taxed for the whole amount of nondeductible IRA contribution converted to Ro...

ThomasM125 — Tue, 11 Feb 2025 00:50:35 GMT

For the backdoor IRA, enter a traditional IRA contribution in the Deductions and Credits section of TurboTax, then Retirements and Investments, then Traditional and Roth IRA Contributions. Indicate that your traditional IRA contribution is non-deductible when asked in the program:

When you enter the 1099-R form in TurboTax, you need to first indicate that you moved the money to another retirement account and that you did a combination of rolling over, converting or cashing out the money. Then, enter the amount converted to a ROTH IRA. Later on you need to indicate that you tracked non-deductible contributions to your IRA. Then you will be asked for your beginning and ending basis in the traditional IRA.