Help! Did I Mess Up My Traditional-to-Roth IRA Conversion? (TurboTax Filing Guidance Needed)

[peakpeaktan01]

Hello everyone, I need your help on how to properly file my tax this year because I think I screw up my traditional and Roth IRA last year. I contributed to my traditional IRA in 2023 and then have Fidelity converted it to Roth IRA for 2024. I recently received a 1099-R form for tax year 2024 from Fidelity for the distribution out of the traditional IRA and I don’t know how to deal with that form.

Timeline:

Traditional IRA:

09/05/2023 - opened the traditional IRA account and contributed $6500 to it

04/16/2024 - $5718.59 converted to Roth IRA, from all available cash in the account

04/16/2024 - $1041.06 converted to Roth IRA, after it sold some stock in the account on that date

05/01/2024 - $13.56 converted to Roth IRA, from dividend received from FDRXX fidelity cash reserve and the traditional IRA’s balance has been $0 since then…

Roth IRA:

02/22/2024 - cash contribution current year $7000 (for 2024)

04/16/2024 - $5718.59 converted from traditional IRA

04/16/2024 - $1041.06 converted from traditional IRA 05/01/2024 - $13.56 converted from traditional IRA

02/10/2025 - cash contribution current year $7000 (for 2025)

Can anyone explain to me how I exactly screwed up it? What should I do for filing my 2024 tax return? I will be using TurboTax to e-file my tax and can turbo tax handle this? I appreciate your help.

[barrybrandell]

Turbo Tax definitely should be able to help you in this situation.  It sure beats paying hundreds of $$$ to a tax preparer. 

[DanaB27]

You should have reported the nondeductible traditional IRA contribution on your 2023 return. TurboTax then should have created a 2023 Form 1099-R with a basis on line 14 and this will be entered on your 2024 return. 

If you didn't report it on your 2023 tax return then you can amend your 2023 return to create the 2023 Form 8606. 

To enter Form 1099-R for the conversion on your 2024 tax return:

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 2023 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

If you do not get the "Any nondeductible Contributions to your IRA?" question then please see Why is my backdoor Roth IRA conversion being taxed?

To enter your Roth IRA contribution for 2024 on your 2024 tax return:

1. Click on "Search" on the top right and type “IRA contributions” 
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. Answer ‘Yes” on the “Roth IRA Contribution” screen
5. Answer “No” to “Is This a Repayment of a Retirement Distribution
6. Enter the Roth contribution amount of $7,000

@peakpeaktan01 

[peakpeaktan01]

Hi, Thank you for your reply. I did not ask IRS in 2023 to count this contribution as pre-tax money(did not ask for refund). I essencially realized that I should not contribute to Tranditional IRA, I was supposed to contribute to Roth IRA in 2023 and I did not do that. So during our tax filing time, I called Fidility and they told me to do the conversion I listed above. With this info, do you think I still need to modify my 2023 return? 
Also, on my 2024 1099-R form from Fidelity, Box 7 Distribution code(s) is showing "2", IRA/SEP/Simple is "X".

Thank you for your help.

[DanaB27]

Yes, you need to report the nondeductible traditional IRA contribution (after-tax contribution) on your 2023 return to have the 2023 Form 8606. Please check your 2023 return to see if you have the 2023 Form 8606 included. If you do not have Form 8606 then you can amend your 2023 return to create the 2023 Form 8606.