How do I enter a backdoor Roth IRA conversion?

[GeorgeM777]

Here are the steps to follow to enter your back door Roth IRA conversion. The steps are for TurboTax online.  Below will be a link to a TurboTax article that will explain not only how to enter a back door Roth IRA conversion using TurboTax online but also TurboTax desktop.

TurboTax Online

Step 1:  Enter the Non-Deductible Contribution to a Traditional IRA

1. Open your return if it’s not already open
2. Inside TurboTax, search for ira contributions and select the Jump to link in the search results
3. Select Traditional IRA on the Traditional IRA and Roth IRA screen and Continue
4. Answer No to Is This a Repayment of a Retirement Distribution?
5. On the Tell Us How Much You Contributed screen, enter the amount contributed and continue
6. Answer No on the Did You Change Your Mind? screen
7. Answer the questions on the following screens, until you reach Choose Not to Deduct IRA Contributions. Select Yes, make part of my IRA contribution nondeductible and Continue

Step 2:  Enter the Conversion from a Traditional IRA to a Roth IRA

1. Inside TurboTax, search for 1099-r and select the Jump to link in the search results
2. Answer Yes to Did you get a 1099-R in 2021?, then Continue
   • If you land on the Your 1099-R Entries screen, select Add Another 1099-R
3. Select how you want to enter your 1099-R (import or type it in yourself) and follow the instructions
4. Answer None of these apply when you reach the screen Do any of these situations apply to you?
5. Select I converted some or all of it to a Roth IRA on the Tell us if you moved the money through a rollover or conversion screen
6. Next, choose Yes, all of this money was converted to a Roth IRA
7. Continue answering questions until you come to the Your 1099-R Entries screen

To check the results of your backdoor Roth IRA conversion, see your Form 1040:

1. On the left side of your screen, select Tax Tools, then Tools
2. Under Tool Center, select View Tax Summary
3. On the left side of your screen, select Preview my 1040
   • Your backdoor Roth IRA amount should be listed on Form 1040, Line 4a  as IRA distributions
   • Taxable amount should be zero unless you had earnings between the time you contributed to your Traditional IRA and the time your converted it to Roth IRA, then the earnings would be taxable
   • Schedule 1, Line 20 IRA deduction, should be blank
4. Select Back on the left side of your screen to return to where you left off in TurboTax

How to Enter a Back Door Roth IRA Conversion

@omkarprabhu

[youngkuurus]

You need to follow the instructions given plus make sure your 1099-R has the "IRA" box checked on the IRA you converted from. There are no income limits on a backdoor Roth IRA conversion.

[omkarprabhu]

This doesn’t work. I did these  steps atleast 10 times and with Tax experts as well. We never get to the step make part of my IRA contribution nondeductible and Continue. It says you have exceeded income. If you look at all the other complaints on this thread. Please let me know if there are any updates made to the software. 

[RobertB4444]

@omkarprabhu  It is a good idea to first clear your cache and cookies - which means removing all of the temporary programs that can gum up your web browser.  If that doesn't work, try using a different web browser.

Here is a link on how to clear your cache and cookies.

You are probably better off having someone walk through the return with you to look at your entries so I recommend getting live expert help.

Here is a link to finding a TurboTax expert.

However, that requires upgrading your product which may be an expense you don't want.  In that case you can call an expert and ask questions over the phone.

Here is a link to the TurboTax Phone Number.

[clevers]

It looks like I am having the same problem as everyone else.  I am getting an error message about income limits trying to do a backdoor conversion.  When I following the steps outlined in this link:

https://ttlc.intuit.com/community/entering-importing/help/how-do-i-enter-a-backdoor-roth-ira-convers...

I get through all the steps, but it still shows line 4b as having a dollar amount in it and not $0.

Has anyone been able to figure out what the issue is?  Do I really have to wait until 3/31 for them to get a fix out?  If so, I want my money back and will go to another software company to get my taxes done.

[DaveF1006]

It depends. Did you have earnings between the time you contributed to your Traditional IRA and the time your converted it to Roth IRA? 

[omkarprabhu]

Yes. I had earnings between then. 

[RobertB4444]

@omkarprabhu  In a true backdoor Roth conversion the contribution should only be in the traditional IRA for seconds before being transferred to a Roth.  If you had any earnings then those are taxable.  

[omkarprabhu]

These were in my account for days. Moreover - the whole reason for backdoor IRA is contribution into a traditional IRA and then moving it to Roth IRA with post tax money. I didnt have any issues for past 5 years with all the Back Door IRAs through Turbo Tax

[DanaB27]

To confirm, do you have more than the earnings as taxable on line 4b of Form 1040?

To preview Form 1040:

1. Click on "Tax Tools" in the left menu
2. Click "Tools"
3. Click "View Tax Summary" in the Tool Center window
4. Click on "Preview my 1040" on the left

Please be aware, that if you get the message that your income is too high after your enter your traditional IRA contribution then this isn't an error, it just means your contribution is nondeductible automatically because of your income and a retirement plan at work.  Please see IRA deduction limits for details.

Please review these steps for backdoor below.

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
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 contributions before this tax year.
9. If you had a basis in the Traditional IRA before then enter the amount.
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 1099-R distribution/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 "Your 1099-R Entries" 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 2020 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

If this doesn't help it would be helpful to have a TurboTax ".tax2021" 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 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.

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.  

@omkarprabhu

[omkarprabhu]

Hi Dana 

Thanks for responding. But the income limits do not matter because this is a backdoor IRA.  Also the only limitation is the amount that you can contribute to IRA and not your income itself. 

Regards

Omkar

https://seekingalpha.com/article/4462134-backdoor-roth-ira?external=true&gclid=CjwKCAiAprGRBhBgEiwAN...

[DanaB27]

Please be aware, that backdoor Roth isn’t just one transaction but actually are two different transactions:

1. The nondeductible traditional IRA contribution and
2. The conversion of the traditional IRA to Roth IRA

Therefore, the IRA deduction limits still apply but they aren't bad since you anyways want to make the contribution nondeductible. These limits don't limit your contribution, they only limit how much you can deduct. But in your case, it doesn't matter since you want it nondeductible anyways because you want to convert it to a Roth IRA. Therefore, you do not need to worry when you get that message in TurboTax that your income is too high to deduct the contribution.

@omkarprabhu

[omkarprabhu]

Hi 

The software is not producing the step for making the contribution nondeductible as I tried all permutation and combination. Can you please verify if a fix is in place. I did this with a turbotax expert as well. 

Regards

Omkar

[DanaB27]

If you get the warning that your income is too high to deduct your contribution TurboTax makes your traditional IRA contribution automatically nondeductible. You should get a screen saying $0 are deductible.

Also, you should see no entry on Schedule 1 line 20 (IRA deductions) and have an entry on line 1 of Form 8606.

If this doesn't happen then please consider sending us a TurboTax ".tax2021" file that is experiencing your 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 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.

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.  

@omkarprabhu

[sv14]

This was really helpful and resolved the issue. Thank you!