topic ROTH IRA conversion from IRA account in Get your taxes done using TurboTax

ROTH IRA conversion from IRA account

nelson-oh — Wed, 31 Mar 2021 20:19:32 GMT

So I know my income is too high to make normal contribution to the ROTH, I setup a traditional IRA account for myself and my wife. Contributed $7000 and $6000 into these accounts in July of 2021 and within 1 day transfer the funds to the ROTH accounts. All accounts are with the same brokerage. I have no other IRA accounts.

Have the 1099-R, downloaded the forms to TT.

Followed all the steps for the income section for the IRA on TT.

Followed the steps in the deduction & credit section of the Traditional & ROTH IRA contribution. Answered all the questions like "amount switched from a traditional IRA to a ROTH"

Marked YES for "made and tracked nondeductible contributions to XXX's IRA". In fact, I tried it both YES & NO, but didn't make a difference.

At the end, TT tells me the $7000 is considered excess contribution due to my income. I thought the IRA to ROTH conversion is so people can contribute to the ROTH by backdoor. Did I enter something wrong somewhere? I can't figure it out.

Re: ROTH IRA conversion from IRA account

DanaB27 — Wed, 31 Mar 2021 20:37:36 GMT

Please do not enter the conversion as a contribution to Roth or select that you changed your mind (recharacterized the amount).

Please review the following instructions to enter a "Backdoor IRA" to ensure it is calculated correctly in TurboTax.

To enter the nondeductible contribution to the traditional IRA:

Open your return
Click on "Search" on the top right and type “IRA contributions”
Click on “Jump to IRA contributions"
Select “traditional IRA”
Answer “No” to “Is This a Repayment of a Retirement Distribution?”
Enter the amount you contributed
Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contributions before this tax year.
If you had a basis in the Traditional IRA before then enter the amount.
On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount.

To enter the 1099-R distribution/conversion:

Click on "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”
Click "Continue" and enter the information from your 1099-R
Answer questions until you get to “What Did You Do With The Money” and choose “I moved it to another retirement account”
Then choose “I did a combination of rolling over, converting, or cashing out money.” and enter the amount next to "Amount converted to a Roth IRA account"
On the "Your 1099-R Entries" screen click "continue"
Answer "yes" to "Any nondeductible Contribution to your IRA?"
Answer the questions about the basis and value

Re: ROTH IRA conversion from IRA account

nelson-oh — Wed, 31 Mar 2021 20:58:37 GMT

Thank you Dana. I followed your steps. First the JUMP TO doesn't work, there is no such link I can see. So I went to "Deductions & Credits" section and I believe this is where you enter the info.

Answer “No” to “Is This a Repayment of a Retirement Distribution?” Done
Enter the amount you contributed Done
Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen This screen does not appear, not an option. I remember seeing this once before, but do not see it anywhere even when I go from the start of the from to the end.
Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contributions before this tax year.
If you had a basis in the Traditional IRA before then enter the amount.
On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount.