Backdoor Roth

[Anonymous]

I am having issues with my backdoor Roth. After inputting, my refund increased. I expected it would stay the same, and I'd see "Rollover" when looking at my 1040 form.

I imported my 1099R for $7K. Additionally, on the input sheet.

1 and 2A are both $7K. Both boxes in 2B are checked. No tax withheld and #7 is set to "2". (Early distribution (except Roth IRA)

I selected " I moved the money to another retirement account"

I selected " I did a combination of rolling over, converting or cashing out"

I put the full amount in "Amount converted to Roth IRA account"

I said No to HSA

Then I said I didn't take any disaster distributions

No to  "I did not make and track non deductible contributions to my IRA"

I read through this prior to posting:

https://ttlc.intuit.com/community/taxes/discussion/turbotax-software-it-does-not-ask-question-about-...

What did I miss?

[MaryK4]

You need to continue until you get to the question regarding nondeductible contributions to your traditional IRA.  (See below.)  This will make the distribution not taxable.

[Anonymous]

I said I didn't take any disaster contributions.

No to "any non deductible contributions" (your screenshot)

I left the value of your traditional IRA blank. 

Then it takes me back to the 2022 income summary

End result is my 1040 4a shows $7k and I do not see rollover.

[DanaB27]

It seems you entered all the correct steps but you should have $7,000 in line 4a and $0 in line 4b (since you didn't have any earnings) for the backdoor Roth.

It would be helpful to have a TurboTax ".tax2022" file that is experiencing this issue. You can send us a “diagnostic” file that has your “numbers” but not your personal information. If you would like to do this, here are the instructions for TurboTax Download: 

1. On your menu bar at the very top, click "Online"
2. Select "Send Tax File to Agent"  
3. Click "Send"
4. The pop-up will have a token number
5. Reply to this thread with your Token number. This will allow us to open a copy of your return without seeing any personal information.  

The instructions for TurboTax Online: 

1. From the left menu select Tax Tools. 
2. Then select Tools below Tax Tools. 
3. A window will pop up which says Tools Center.  
4. On this screen, select Share my file with Agent. 
5. You will see a message explaining what the diagnostic copy is. Click okay through this screen and then you will get a Token number. 
6. Reply to this thread with your Token number. This will allow us to open a copy of your return without seeing any personal information.  

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution.

@Anonymous 

[Anonymous]

Thank You, the token is 1081940

[DanaB27]

Thank you for your token. I review your return and you entered the backdoor Roth correctly. You have the $7,000 on line 4a and $0 on line 4b. It correctly doesn't show "rollover" since this is a conversion. You can continue with your return.

@Anonymous 

[Anonymous]

It's counter to how my 2020 and 2021 taxes came out. Both show rollover. Can I generate tokens on those years so you can take a look?

[DanaB27]

Yes, you can send me a token for the 2021 tax return. Most likely it will be the same issue on both returns.

[Anonymous]

Hi, My 2021 return is 1082572. It should say "rollover" when you look at the 1040. The intent was the same thing for both years (and prior). I contributed to an IRA, then transitioned it to a Roth the following day.  Let me know if an error was made. Thanks

[DanaB27]

Thank you for the token. I reviewed your return. You selected "rolled over all of this money" instead of “I did a combination of rolling over, converting, or cashing out money” on the "What did you do with the money" screen.

Please 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". The words rollover will disappear on line 4. and it will correct Form 8606 as well which shows incorrectly a $7,000 basis on line 14.

I assume this will be the same issue for your 2020 tax return.

@Anonymous 

[Anonymous]

Thanks for the response. I'm still digesting this. I plug it in they way you suggested. Rollover disappears, my return, at least for 2021, remains the same. Is the a reason why I'd want to do an amended return?

I do see "Rollover"on my 2020 return. I haven't validated no change in return in the software yet.

[ThomasM125]

If your tax did not change, it is not necessary to file an amended return.

[Anonymous]

My 2020 return says "rolllover" also. When I follow the same process and flip "I rolled over all the money" to " I did a combination", my refund drops. I notice in my 1040 4b goes from 0 to $6,000.

I don't understand why it would turn taxable if it's a Roth.

Can someone take a look? I did a token, and it's 1084544.

[DanaB27]

Thank you for the token. I reviewed your return. You didn't have any nondeductible traditional IRA contribution for 2020? I didn't see any contributions entered. 

Please be aware that conversions to Roth IRA from a pre-tax account like a traditional IRA are taxable unless you made nondeductible contributions (had a basis in the traditional IRA).

If you forgot to enter your nondeductible traditional contribution for 2020 made in 2020:

1. Open your return
2. Click “Deductions &Credits” on the top
3. Click "I'll choose what to work on"
4. Scroll down to “Traditional and Roth IRA Contributions” and click “Start”
5. Select “traditional IRA”
6. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
7. Enter the amount you contributed
8. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
9. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had nondeductible contributions before this tax year
10. Enter your basis in the Traditional IRA from your 2019 Form 8606 line 14 (if you had a basis in the prior year)
11. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (if you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible).

If you converted in 2020 a nondeductible traditional IRA contribution that you made for 2019 then you should have had a basis on your 2019 Form 8606 line 14 that has to be entered in when TurboTax asks about the prior year's nondeductible IRA contributions (step 11 and 12):

1. Click "Federal Taxes" on the top and select "Wages & Income"
2. Click "I'll choose what to work on"
3. Scroll down and click "Start" next to "IRA, 401(k), Pension Plan (1099-R)" 
4. Answer "Yes" to the question "Did You Have Any of These Types of Income?"
5. Click "I'll Type it Myself"
6. Choose "Form 1099-R, Withdrawal of Money from 401(k) Retirement Plans, Pensions, IRAs, etc."
7. Click "Continue" and enter the information from your 1099-R
8. Answer questions until you get to “What Did You Do With The Money” and choose “I moved it to another retirement account”
9. 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"
10. On the "Your 1099-R Entries" screen click "continue"
11. Answer "yes" to "Any nondeductible Contribution to your IRA?" if you had any nondeductible contributions in prior years.
12. Answer the questions about the basis from line 14 of your 2019 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

@Anonymous 

[Anonymous]

For 2020,  I input what I thought was correct, appeared validated since wasn't showing up as a taxable amount on the 1040, 

Looking again, I didn't do a two step process and didn't enter data on the deduction and credit area.

When I do enter it there, then flip "rollover" to "I did a combination of..", there is no difference to my refund.

Although I may have entered it incorrect, the amount of tax I paid is correct, should there be anything to be concerned about? Earlier in the thread someone said there's no need to refile for my 2021 error, just want to make sure I don't end up with any issues if trying to withdraw.