How do I enter a backdoor Roth IRA conversion?

[youngkuurus]

I have been using TurboTax for several years and I always have problems entering my backdoor Roth IRA conversion on the TurboTax online. My wife and I both put in $7,000 non-deductible after tax dollars into a IRA in 2021 and then immediately converted it to a Roth IRA. When I follow the two step process I must be missing something this year as it doesn't change my taxes and when I preview my 1040 (using Tax Tools then Tools) my Form 1040, Line 4a  is blank instead of showing the correct $14,000.

[mama2dylan22]

How do I enter a backdoor Roth IRA conversion?

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

[youngkuurus]

The link that sends to the backdoor Roth IRA conversion is not working for me this year. I don't understand step 2.1 is trying to say as I don't get a "jump to link".  I get all of the other prompts except 1.7 I assumed because all of my my IRA contributions are nondeductible.

[DawnC]

Here are the Online instructions below.   Step 2.1 is just to get you to the 1099-R section of the software.   In the search box, type 1099-r and hit enter.   You should see a Jump to 1099-r link in the search results.   You may want to delete the 1099-r you started and then go through all of the steps again, slowly, carefully reading each step below.     You have to have earned income entered in order to get to the screen in 1.7 - Choose not to deduct IRA contributions.

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

[youngkuurus]

I get all of the prompts that you state except when I enter my non-deductible IRA it doesn't ask "Do you want to make your IRA contributions nondeductible?". I get "Income Too High To Deduct an IRA Contribution" which is the same thing but it doesn't seem to filling out the 1040 line 4a with my non-deductible IRA contributions as it has in past years. Because of this, TurboTax is making me pay income taxes on my non-deductible IRA contribution that I converted to a Roth IRA. This is unacceptable.

I called in and got a case number [phone number removed] which was set to "resolved" but nothing was resolved. It looks like there is a software bug this year with TurboTax Premier. The agent said I filled everything out correctly but couldn't figure out why TurboTax wasn't filling out the 1040 line 4a correctly.

If I can't get this resolved soon then I will have to use another companies tax software.

[ThomasM125]

You should make sure when you entered your 1099-R distribution, that you indicated the the funds were Moved to another retirement account and Rolled Over. You will see this option on the 1099-R entry screen that says What Did You Do With The Money From (recipient name). That should prevent the proceeds from being listed as taxable.

[youngkuurus]

I didn't roll over any of the non-deductible funds. I deposited after tax funds from my savings into an IRA and then converted them immediately to a Roth IRA hence a backdoor Roth IRA conversion. As the funds were after tax the conversion isn't taxable.

[ThomasM125]

I assume you received a form 1099-R reporting the conversion. Typically, it shows as a distribution. So, in effect you withdrew the funds from a traditional IRA then rolled them over to the ROTH IRA. That is why it is considered a rollover.

[youngkuurus]

2022 Turbotax software still doesn't work for backdoor Roth IRA conversion. I didn't have any problems with my 2018, 2019 and 2020 tax years using Turbotax and the instructions were the same.

I

The only difference in the instructions is when I enter my non-deductible IRA it doesn't ask "Do you want to make your IRA contributions nondeductible?". I get "Income Too High To Deduct an IRA Contribution" 

My case #[phone number removed] was set to "resolved" because they couldn't explain why the software wasn't working.

[DanaB27]

Please be aware, that Form 1040  4a shows your total distributions and not the nondeductible part. If you didn't have any earnings during the conversion then you will have a $0 taxable amount in line 4b. Sometimes TurboTax will not show the amount in 4a but that doesn't affect the correctness of the amount in 4b.

Yes, if you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a screen saying $0 is deductible. Your basis of $7,000 will be entered on line 1 of Form 8606. You will have two Form 8606 one for you and one for your wife.

@youngkuurus 

[sjsheppa]

I am having this exact same problem. It never asks me if I want to make any of my contributions nondeductible, and the Form 1040 shows a taxable amount even though I did the backdoor conversation.

[youngkuurus]

I have called into Turbotax and they agree that something is wrong with the software this year. They elevated the issue. I am waiting to hear back.  I would recommend that you call Turbotax that you are having the same problem. It looks like Step 1 item 7 is what is wrong this year. Turbotax worked fine for me on my 2018, 2019, 2020 taxes using the same instructions.

[Knot at Work]

I am getting this same issue... I am trying to input my 1099-R for my backdoor Roth and getting the same issues as younkuurus. My contribution is nondeductible but your software is taxing me this year. How do I get this corrected? I have been on the phone with your tax experts multiple times without a resolution. 

Thank you,

[faceplant08]

I can confirm it finally showed up correctly for me. 1040 line 4a showing the correct amount and the taxable amount on line 4b is 0.

[Knot at Work]

Are you using the premier Online version? If so, how did you get this to work? I am getting the following error "Your Wife Can't deduct contributions to a traditional IRA if you are covered by a retirement plan at work and your modified adjusted gross income (AGI) is more than $208,000.

I have gone through these forms with Turbo tax specialist's multiple times, and this shows up. This is the 1st time using Turbo tax but haven't had this taxable issue in a backdoor Roth in past years.

Thank you in advanced.