How do I enter a backdoor Roth IRA conversion?

[DanaB27]

Yes, once you selected “Yes” on "Did You Change Your Mind" screen you won’t get that screen again unless you leave the “Tell us how much you transferred” screen blank (here you enter the amount recharacterized not the amount transferred). If you entered $0 or anything else delete that entry and continue through the IRA interview. The next time you go through the IRA contribution interview the "Did You Change Your Mind" screen should be there again. 

Another option is you can delete all the contribution entries and reenter them with these steps in TurboTax Online:

1. In the left menu, select "Tax Tools" and then "Tools".
2. In the pop-up window Tool Center, select "Delete a form".
3. Select "Delete" next to the IRA Contribution Worksheet in the list and follow the instructions.
4. Click on "Search" on the top right and type “IRA contributions” 
5. Click on “Jump to IRA contributions"
6. Reenter your contributions.

@lilly6

Did this answer your question or were you referring to a different question?

@dragstang86

[CCC261]

I have the same problem and using the Premier edition......this should be one of the most common cases for people wo purchase the premier edition.  I've posted a question elsewhere in the forum before I found this.

[DanaB27]

If you made a Roth contribution for 2021 and recharacterized it in 2021 then you will enter the recharacterization when you enter the contribution to the Roth IRA on your 2021 return:

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 “Roth IRA”
5. Answer “No” to “Is This a Repayment of a Retirement Distribution
6. Enter the Roth contribution amount 
7. Answer “Yes” to the recharacterized question on the “Did You Change Your Mind?” screen and enter the contribution amount (no earnings or losses)
8. TurboTax will ask for an explanation statement where it should be stated that the original $xxx.xx plus $xxx.xx earnings (or loss) were recharacterized.
9. On the screen "Choose Not to Deduct IRA Contributions" answer "Yes" (if you are thinking about doing a backdoor Roth. 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 made a Roth contribution for 2020 and recharacterized it in 2021 then you will need to report it on your 2020 tax return with the above steps. TurboTax will create Form 8606 with a basis on line 14 to carry over to 2021. Please see How do I amend my 2020 return? if needed.

To enter your 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 “What Did You Do With The Money” and choose “I moved it to another retirement account”
5. 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"
6. On the "Your 1099-R Entries" screen click "continue"
7. Answer "yes" to "Any nondeductible Contribution to your IRA?" if you had any nondeductible contributions in prior years.
8. Answer the questions about the basis from line 14 of your 2020 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs.

@CCC261

[jessechand]

I am a customer of many years and have been able to do the Backdoor Roth just fine. This time my backdoor Roth is showing up as taxable income incorrectly. My token number is 994896. 

My 1040 line 4b is showing $6000 taxable distributions. I had $0 in my Traditional IRA at the beginning of the year. I added $6000 and immediately converted it into a Roth. I did the same thing last year and didn't have an issue, so not sure what's going on this year. 

[DanaB27]

I reviewed your file. It shows that you made a contribution in 2022 for 2021 and no basis from 2020 (line 2 Form 8606). Since the contribution was made in 2022 for 2021 the conversion will happen in 2022, not 2021.

If you made the contribution for 2021 in 2021 then you will need to delete the entry under contribution made from January 1, 2022, through April 18, 2022, in the IRA contribution interview.

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 contribution 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).

@jessechand

[barathvasu]

I have a question regrading my filing for Tax year 2020 for back door Roth conversion. I started back door roth IRA conversion first time for the year 2020, I contributed for backdoor for the year 2020 between Jan 2021 to April 2021. In my 8606 I see the following, is that correct?

8606 Entries
1) Enter your nondedutible contributions to tradition IRAs for 2020 including those made From January 1, 2021, through April 15, 2021. See instructions .. $6000

2) Enter your total basis in traditional IRAs. See instructions . . .. $0

3) Add lines 1 and 2 . . . . . . . . . . . . . . . .. $6000

In 2020, did you take a distribution from traditional, SEP, or SIMPLE IRAs, or make a Roth IRA conversion?

Since I did tradtional to ROTH IRA conversion I believe this should state 'Yes' Is that correct? If yes, then Item #4 in 8606 is blank for this item "Enter those contributions included on line 1 that were made from January 1, 2021, through April 15, 2021"

Question: 

1) This line item #4 doesn't have any value in it, is this correct or Do I need to amend my returns?

FYI Line #14 "Subtract line 13 from line 3. This is your total basis in traditional IRAs for 2020 and earlier years ." has the value $6000

2) Lets say for the above scenario, since I did the conversion on 2021 year. Is there any IRS rule that conversion done applies only for the year 2021 not 2020?

[CCC261]

TTax does not seem to recognize that I am recharacterizing an amount, then simply converting that amount to Roth  It continues to tell me I have excess contributions.   How do I link the recharacterization and the backdoor conversion to Roth together?  It wants to tax me, 6% extra, withdraw excess, etc.....

[FangxiaL]

If you recharacterized a Roth IRA to Traditional IRA for a contribution made for 2021 and converted in 2021, enter the contribution as a Traditional IRA (the Roth IRA contribution never happened since you recharacterized it). 

Follow the two-step process to enter your contribution and conversion. 

@CCC261

[DanaB27]

Yes, it is correct that line 4 is blank because Form 8606 states "In 2020, did you take a distribution from traditional, SEP, or SIMPLE IRAs, or make a Roth IRA conversion?" if no "Enter the amount from line 3 on line 14". Your conversion happened in 2021 and therefore your answer would be no and line 4 stays blank.

No, the rules for conversion are the same for 2020 and 2021.

@barathvasu

[BoooTaxes]

Ok, kind of the same issue as many people on here.  Doing a conversion on a Traditional Non Deductible IRA to a Roth.  I did 6K deposit into my Traditional account earlier in 2021, then immediately converted that to the Roth.  I still had a remaining balance in the Traditional (all non deductible), I then converted that remaining balance to the Roth.  Turbo has my cost basis correct.  It is handling the tax portion correctly, but it keeps giving me a warning & telling me my Magi is too high & that it is a excess contribution.  I know there are no dollar limits on converting an IRA to a Roth.  Why is giving me the warning & telling me there will be a penalty?  Thanks    

[macuser_22]

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@BoooTaxes wrote:

Ok, kind of the same issue as many people on here.  Doing a conversion on a Traditional Non Deductible IRA to a Roth.  I did 6K deposit into my Traditional account earlier in 2021, then immediately converted that to the Roth.  I still had a remaining balance in the Traditional (all non deductible), I then converted that remaining balance to the Roth.  Turbo has my cost basis correct.  It is handling the tax portion correctly, but it keeps giving me a warning & telling me my Magi is too high & that it is a excess contribution.  I know there are no dollar limits on converting an IRA to a Roth.  Why is giving me the warning & telling me there will be a penalty?  Thanks    

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You must have entered a Roth contribution in the IRA contribution interview.   Your ONLY contribution was to a Traditional IRA and it was NOT a "switch to a Roth" (recharactorization), it was a conversion that you should have received a 1099-R for the entire amount of the conversion.

If you thought that "switching to a Roth" was the same thing - it is not.   That just changes the Traditional IRA contribution to a Roth contribution which you already knew you could not make or you would not be doing a backdoor Roth in the first place.

[BoooTaxes]

Ok, I think that might be it. I know I had both boxes checked for a Traditional & Roth.  I'll check it out. 

Thanks 

[macuser_22]

Nothing should be checked for Roth.

[barathvasu]

On the same lines for this year, this is what I did.. Contribution for Tax year 2021 was done between Jan 2022 to April 2022 and ROTH IRA Conversion was done in March 2022 for that amount. 

I am planning to do back door contribution for Tax year 2022 now i.e. April 2022 and do a ROTH IRA a conversion immediately. Now will this have any impact on my next year filing since the amount in 1099-R will be around 12,000?

@macuser_22 @DanaB27 

[BoooTaxes]

Thank you, that was it.  I had put the entire "conversion" amount as a Roth Contribution, once I Zero'd that out, it saved me money & fixed the issue.