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Level 2
posted Feb 25, 2024 6:43:24 PM

Excess backdoor Roth IRA conversion (how to enter)

Because of my income level, I must do a backdoor conversion to able contribute to Roth IRA. I did this through Vanguard. I first put $7,500 (I am over 50) into my Traditional IRA in 2023, then converted all of it to Roth IRA (backdoor) after two days. During these two days, while my money was sitting in my Traditional IRA account, it gained a value of 87 cents. Consequently, I have converted all the money to Roth IRA (backdoor IRA). The converted amount was $7,500.87.

 

It’s not clear to me how to enter this information in Turbo Tax. When I file my taxes on paper, it was easy to do this. I just paid taxes for 87 cents, and I was all set. Can someone give me guidelines how to do this in online version of Turbotax. This is the only part I am stuck at. In the past years, when there was no excess conversion, I was able to follow the TurboTax instructions, but with excess conversion, I am confused. If I can figure this out, I do not have to go to another preparation office. Thank you.

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1 Best answer
Expert Alumni
Feb 26, 2024 3:57:21 AM

Please use the instructions below to enter a "Backdoor IRA" to ensure it is calculated correctly in TurboTax. TurboTax will prepare Form 8606 for you to calculate the taxable part.

 

To enter the nondeductible contribution to the traditional IRA:

 

  1. Login to your TurboTax Account 
  2. Click on "Search" on the top right and type “IRA contributions” 
  3. Click on “Jump to IRA contributions"
  4. Select “traditional IRA”
  5. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
  6. Enter the amount you contributed of $7,500
  7. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
  8. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contribution before this tax year.
  9. Enter your basis in the Traditional IRA from your 2022 Form 8606 line 14 (if you had a basis in the prior year)
  10. 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).

 

To enter the Form 1099-R conversion: 

 

  1. Click on "Search" on the top right and type “1099-R”  
  2. Click on “Jump to 1099-R”
  3. Click "Continue" and enter the information from your 1099-R
  4. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
  5. On the "Review your 1099-R info" screen click "Continue"
  6. Answer "Yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
  7. Answer the questions about the basis from line 14 of your 2022 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

 

 

2 Replies
Expert Alumni
Feb 26, 2024 3:57:21 AM

Please use the instructions below to enter a "Backdoor IRA" to ensure it is calculated correctly in TurboTax. TurboTax will prepare Form 8606 for you to calculate the taxable part.

 

To enter the nondeductible contribution to the traditional IRA:

 

  1. Login to your TurboTax Account 
  2. Click on "Search" on the top right and type “IRA contributions” 
  3. Click on “Jump to IRA contributions"
  4. Select “traditional IRA”
  5. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
  6. Enter the amount you contributed of $7,500
  7. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
  8. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contribution before this tax year.
  9. Enter your basis in the Traditional IRA from your 2022 Form 8606 line 14 (if you had a basis in the prior year)
  10. 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).

 

To enter the Form 1099-R conversion: 

 

  1. Click on "Search" on the top right and type “1099-R”  
  2. Click on “Jump to 1099-R”
  3. Click "Continue" and enter the information from your 1099-R
  4. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
  5. On the "Review your 1099-R info" screen click "Continue"
  6. Answer "Yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
  7. Answer the questions about the basis from line 14 of your 2022 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

 

 

Level 2
Mar 25, 2024 6:08:11 PM

Instructions are little bit lacking of details, but I was able to do it by following Turbotax help document. Important thing I learned is that you enter allowed limit (for me it was $7500 contribution in the first part, not entered $7500.87), and when I entered 1099-R  form as it was, turbotax took care of the rest. It worked fine. Thank you.