Backdoor Roth IRA - Help to verify everything is being entered properly (2024 TurboTax Deluxe - Desktop)

[Lily725]

Hello, I am finishing up my tax return, and wanted help to verify that I am inputting the correct information for a Backdoor Roth IRA Conversion in my TurboTax desktop software.  For background, I have had a Roth IRA opened for about 4 years now.  The first two years I made non-tax-deductible contributions directly to the Roth, and in the previous two years I have opened a Trad IRA where I make my non-tax-deductible contributions to, and then convert those funds (Backdoor Roth Conversion) to my Roth.  Since starting the backdoor Roth conversions, I have received 1099-R forms, which I have inputted into TurboTax.  The following are the steps that I am going through to input this, and am just looking for confirmation that it is correct, or advice if I need to be doing something differently.

Federal Taxes > Wages & Income > Retirement Plans > IRA, 401(k), 1099-R:

• I auto-imported my Form 1099-R directly from my broker, and reviewed the information:
  • Box 2b: Only "Taxable amount not determined" checked
  • Box 7: 2-Early distribution, exception applies
  • IRA/SEP/SIMPLE box is checked
•  Good news: You don't owe extra tax on this money
• Is this 1099-R for a contribution that your employer made... > NO
• Did I inherit the IRA... > NO
• What did you do with the money... > I moved the money to another retirement account
  • Choose which of the following applies > I did a combination of rolling over, converting, or cashing out the money
  • Tell us how much $$ I moved to an IRA, 401(k), or other retirement account > Amount converted to a Roth IRA account (entered the full amount)
• Did I put this money in a HSA? > NO
• Was this a withdrawal due to a disaster? > NO

After this I continued to Deductions & Credits > Retirements and Investments > Trad & Roth IRA Contributions:

• I checked both boxes for "Traditional IRA" and "Roth IRA"
• Is this repayment of a retirement distribution? > NO
• Tell us how much you contributed (Traditional IRA) > Entered the total from the 1099-R form in the 2024 Traditional IRA contributions
• Did you change your mind? > NO
• Any excess IRA contributions before 2024? > NO
• Any nondeductible contributions to my (Traditional) IRA > NO
  • This is one of the sections I wasn't fully sure of, because I converted to a Roth. Technically, I contributed to the Trad IRA, but then immediately converted it to a Roth.  Should I instead be putting Yes in this section?
• Tell us the value of all your Trad IRA accounts > $0 (because I immediately convert all contributions to my Roth)
• Did I make Roth IRA Contributions for 2024? > NO (because they were conversions?)
• Track Roth basis? > YES
• Withdraw from Roth before 2024? > NO
• Enter prior year Roth contributions > entered total of direct contributions from first two years of account
• Tell us the years > checked the years that I converted a Trad IRA to a Roth IRA
• Entered Conversions > Entered the amount I converted from Trad IRA to Roth IRA for the selected years
• Adjust Roth IRA due to divorce? > NO
• Any excess Roth contributions? > NO
• Income too high to deduct an IRA contribution
• Your IRA Deduction Summary > $0

After this, I double checked how it filled out my Form 8606, and it looks as follows for key inputs:

• Box 1 - Nondeductible contributions to Trad IRAs: full amount from 1099-R that I converted
• Box 2 - Total basis in Trad IRAs: $0
• Box 3 - Add lines 1 and 2: Full amount from Box 1
• Box 16 - Net amount converted from Trad to Roth: Full amount from Box 1
• Box 17 - Basis in the amount on line 16: Full amount from Box 1
• Box 18 - Taxable amount: $0

Lastly, in the IRA Info Worksheet, my basis and value for Traditional IRAs is $0, and my basis (contribution and conversion history) for Roth IRA is correctly broken down between direct contributions and conversions as of 12/31/2024.

I think I have finally done this correctly, but just wanted confirmation from someone who has done this before.  Thanks in advance for any help!

[DanaB27]

To clarify, was the amount converted the same as you directly contributed to the Traditional IRA? You didn't have any gains? Please make sure you only enter the amount directly contributed to the Traditional IRA for "Tell us how much you contributed (Traditional IRA)" in the IRA contribution interview.

If you converted the full amount in 2023 then you basis from the prior year should be $0 and you correctly answered "No" to "Any nondeductible contributions to my (Traditional) IRA".

[Lily725]

Thank you for your response.  Yes, the amount that I converted was the same* as what I directly contributed to the Traditional IRA. 

*My direct contribution was a whole, round number, but the conversion amount shown on my 1099-R was a few cents higher, but rounded to the same whole number.  I used the number listed on my 1099-R to keep things consistent - is there any concern with doing this?  For example, let's say my tax year contribution to my Trad IRA was $1,000.00, my conversion amount as listed on my 1099-R was $1,000.15.  My broker would typically process my conversions within a day or two of my Trad IRA contributions, so I assume this resulted in these negligible gains? 

Seeing as how TurboTax typically rounds numbers to the nearest whole number, I assumed this was not something to concern myself with, but please let me know if I should do something differently.

Thank you!

[DanaB27]

In your case it was fine since it rounded the amount down but usually you should only enter the amount you actually contributed in the IRA contribution interview not the amount listed on Form 1099-R. So in your example $1,000.