HELP with backdoor Roth IRA

[roc41]

Hello, I have tried a lot of options yet I am doing something wrong because either I am being taxed on my conversion from traditional IRA to Roth. Or if I chose other options, my 8606 is not populating correctly

My situation: 
1. I contributed $6500 to a traditional IRA in 2024 (for 2023) in Dec'23. This is the first time I ever contributed to this account.

2. I received a dividend of $4.47 and I transferred $6504.47 to Roth IRA  in early Jan'24

3. At the end of Jan'24, I received another dividend of $3.56 (equal to Balance at the end of Dec'24)

4. During tax filing of 2023 in April 2024,  I missed  mentioning anything about my traditional IRA contribution.

5. Received form 1099-R with amount $6504.47 and distribution code= 2

6. In March 2025 , I contributed $6996 to a the traditional IRA account for 2024

Filing for 2024 : 


7. During tax filing for 2024, I answered this question "Tell us if you moved the money through a rollover or conversion" with "I converted some or all of it to a Roth IRA"
8. Then the following question "Did you convert all of this $6,504.47 (Box 1) to a Roth IRA?" has been answered with "Yes, all of this money was converted to a Roth IRA"
9. On the following screen, I am asked "Any Nondeductible Contributions to your IRA?" -- "Let us know if you made and kept track of any nondeductible contributions to your traditional IRA from 2023 or prior years.". The answer is "No, I did not make and track nondeductible contributions to my IRA."
10. On the following screen - "Tell Us the Value of Your Traditional IRA". Value of all traditional IRA+SEP+Simple. The answer is $3.56. I see the taxable amount rise here which seems unexpected to me as I did a conversion from Traditional to Roth IRA
11. Under the Traditional and Roth IRA section, I answer the following:

My main question is:

Why is this a taxable event if my traditional IRA contribution is a nondeductible?

Thank you

[DanaB27]

You should have reported the Traditional IRA contribution for 2023 on your 2023 return and made it nondeductible. Then TurboTax would have added the 2023 Form 8606 with the basis on line 14 of $6,500 and this has to be entered in the 2024 tax return when TurboTax asks about "Any nondeductible Contributions to your IRA?"

You can amend your return to add the 2023 Form 8606 and mail it to the IRS. Please see How do I amend my federal tax return for a prior year?

Please see How do I enter a backdoor Roth IRA conversion? for additional information.

[baldietax · Accepted solution]

I think the main problem is you are saying "no" to the question whether you made any non-deductible contributions to your IRA, and if you also missed this in 2023 then your Form 8606 will not be showing any 'basis' for the IRA to carry over from 2023 to 2024.  Without any basis, your IRA will be reflected as all "pre tax" money and any withdrawal from it will be taxed.  The premise of the backdoor Roth is that all your IRA is "after tax" money and the withdrawal from it is there not taxed (or taxed very lightly if you have earnings that accumulated between contribution and conversion e.g. if you contribute 6500 and convert 6504.47 you will pay a little tax on the 4.47 earnings).

Based on what you are describing I think your basis in the IRA from 2023 would have been 6500.

Go back thru the Traditional and Roth IRA section, say yes to "any non-deductible contributions to your IRA" and the next screen will ask you for the basis as of 12/31/23.  Put 6500 in there and then answer the question for the value of your IRAs as of 12/31/24 (in your description you said 3.56 in step 10 but 7000 below it - sounds like it was 7000).

Then go back thru the 1099-R questions again just to make sure everything is consistent.

You will also need to file a Form 8606 for 2023 I think, but you can just mail that form in alone if it was just a contribution missed for 2023 and no tax impact you don't need to refile your 2023 taxes - see comment at the end of help page below.

See this help page for the steps https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-benefits/enter-backdoor-roth-...

Not a CPA/Expert just my 2 cents how to proceed based on what you've described, hope this helps.

[roc41]

Thank you

[roc41]

Thanks. You're a savior