TurboTax

File with experts
File your taxes
Experts at your fingertips

An expert helps with your taxes, or does them for you
TurboTax Expert Full Service

TurboTax Expert Assist

TurboTax Self-Employed
Prior year taxes
File myself
File myself
Do it yourself

We'll guide you step-by-step
TurboTax Do It Yourself

TurboTax Self-Employed

TurboTax Desktop
TurboTax Free

Activate your product

Prior year taxes
Business
Business
Business taxes

Get your T2 corporate return done right, your way
TurboTax Business

TurboTax Business Desktop
Tax situations
Tax situations
Tax situations

Find extra guidance for your big life moves
For investors

For 25 and younger

For self-employed

For new to Canada

For life changes
Resources
Resources
Resources

Explore tax tools, get tips, and read reviews
Personal income tax calculator

RRSP savings calculator

Learning hub

TurboTax support (FAQ)

TurboTax community
Pricing

Level 2

Question

back door roth problem with basis

Forum|Forum|4 years ago
March 16, 2022
1 reply
2 views

I am having a problem reporting a back door roth conversion. MAYBE it is due to the glitch that I am reading about that MAY be remedied on 3/31/22, but maybe i am doing something wrong. My wife's traditional IRA had 14,000 basis at the end of 2020. i added 7000 in 2021 (bringing the basis up to 21,000). I converted 15,000 in 2021 to the roth. My understanding is that the entire conversion should not be taxable since I have more than enough basis to cover the conversion (the basis should go down to $6000 after the conversion). however, what my TT deluxe is doing is to claim that I have $2863 in non taxable contribution and $12,137 in taxable contribution and the basis for 2021 will be $18,137. does that sound right to the experts out there or is there a software glitch?

Level 15

are you aware of the IRS pro-rata rule?

tax basis in IRAs $21

IRA value (all her IRAs) $84

Step 1: Calculate non-taxable portion of total Non-Roth IRA’s: Total after-tax contributions / Total Non-Roth IRA Balance = Non-Taxable %:

$21 / $84 = 25.00%

Step 2: Calculate the non-taxable amount by converting the result to Step 1 into dollars:
25.00% x $15 = $3.75

Step 3: Calculate the amount that will be added to your taxable income:
$15 – $3.75 = $11.25

see form 8606 where taxable and nontaxable portions are calculated

so it would seem that the value of your spouse's IRAs is more than her tax basis making a portion of the conversion taxable.

Mike9241

dlemonroe63Author

Level 2

so, are you saying that even if the amount converted is post tax money, that a portion of that money may still be taxed again?

Level 15

since I have more than enough basis to cover the conversion (the basis should go down to $6000 after the conversion).

completely wrong you must use the calculation on Form 8606.

You can never convert only pre-tax contributions.

Backdoor roth conversion only works if you start the process with no money in Traditional IRAs.