My back door ROTH IRA contribution is getting taxed, can't find anywhere to uncheck so the TT doesn't see my switch not a contribution

[nelson-oh]

So I know my income is too high to make normal contribution to the ROTH, I setup a traditional IRA account for myself and my wife.  Contributed $7000 and $6000 into these accounts in July of 2021 and within 1 day transfer the funds to the ROTH accounts.  All accounts are with the same brokerage.  I have no other IRA accounts.

Have the 1099-R, downloaded the forms to TT.

Followed all the steps for the income section for the IRA on TT.

Followed the steps in the deduction & credit section of the Traditional & ROTH IRA contribution.  Answered all the questions like "amount switched from a traditional IRA to a ROTH"

Marked YES for "made and tracked nondeductible contributions to XXX's IRA".  In fact, I tried it both YES & NO, but didn't make a difference.

At the end, TT tells me the $7000 is considered excess contribution due to my income.  I thought the IRA to ROTH conversion is so people can contribute to the ROTH by backdoor.  Did I enter something wrong somewhere?  I can't figure it out.

I followed some suggestions:

1. Open your return 
2. Click on "Search" on the top right and type “IRA contributions”
3. Click on “Jump to IRA contributions"
4. Select “traditional IRA”

1. Answer “No” to “Is This a Repayment of a Retirement Distribution?”  Done
2. Enter the amount you contributed  Done
3. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen  This screen does not appear, not an option.  I remember seeing this once before, but do not see it anywhere even when I go from the start of the from to the end.
4. 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.
5. If you had a basis in the Traditional IRA before then enter the amount.
6. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount.

[DawnC]

A backdoor Roth IRA allows you to get around income limits by converting a Traditional IRA into a Roth IRA. Contributing directly to a Roth IRA is restricted if your income is beyond certain limits, but there are no income limits for conversions.   It sounds like you have done the steps out of order.  

Doing a backdoor Roth conversion is a two-step process.   Follow these instructions and when you get to step 2, delete the 1099-R you already entered and start a fresh new one. 

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 1040 Postcard, Line 4  as IRA distributions.
   • Taxable amount should be zero unless you had earnings between the time you contributed to your Traditional IRA and the time you converted it to Roth IRA, then the earnings would be taxable.
   • Schedule 1, Line 19 IRA deduction, should be blank.
4. Select Back on the left side of your screen to return to where you left off in TurboTax.

[nelson-oh]

In the 2 step instruction, the "JUMP To" link is not there.  

Aside from that, On the Tell Us How Much You Contributed screen, I entered $7000 for myself.  after that, it asks "amount switched from a traditional IRA to a ROTH" which I entered $7000. 

It did not ask me "Did you change your mind".

However, when I enter the info for my wife, it does have a screen for "did you change your mind".  

I don't see any difference in the way I entered my info vs. her info, only the amount is different.

[MarilynG1]

@nelson-oh It could be the Code in Box 7 of the 1099-R that generates certain screens for each of you.

Since we can't see your return in this forum, but you stated that you downloaded your 1099-R, you could delete your 1099-R and re-enter it manually.

Click this link for info on How to Enter a Backdoor Roth Contribution.