How do I enter a backdoor Roth IRA conversion?

[wangny]

Only one modification in step 7: input 0 for "tell us how much you transferred" instead of answer "No". 

[wangny]

You can ignore the warning and continue to choose all non-deductible. After completing the 1099R section, in 1040 preview, you will see 0 in line 4b.

[wangny]

Sorry, it came back in the review step. 

[silviosangineto]

I have the same challenge, did you solve? I'm getting crazy!

[trbelair]

For my spouse...

For 2021, we created a Roth IRA ACCOUNT at Fidelity in 2021 with $0.  In Feb2022 we moved $7,000 to her Traditional IRA (for 2021) and then converted it to her ROTH IRA in Feb2022 (for 2021). 

For 2022, right after the first $7,000, we moved another $7,000 to her Traditional IRA (for 2022) and we are waiting for that $7,000 to clear before we convert it to her Roth IRA (for 2022).

I'm hoping that

1040 Line 4a will have $14,000 ($7k for me, $7k for her)

1040 Line 4b will have $0 (Taxable Amount)

8606-T for me seems fine, Line 16=17 both have $7k, Line 18 has $0.  Looks fine.  (My $7k conversion happened in 2021.

8606-S (Spouse) does not look fine.  It has $7k as a taxable amount.  If I make it look like my Roth IRA conversion (make it look like the conversion took place in 2021 rather than 2022 like it actually happened) then I can make it work, but this does not seem right.  I'm wondering how I can answer these questions accurately (2022 conversion for 2021 taxes) in TurboTax and have it come out correctly on ,y 1040 and 8606-S forms?

[DanaB27]

First, 4a (total IRA distribution) will only show $7,000 from your conversion since your spouse's conversion didn't happen until 2022 (her conversion will go on your 2022 tax return). Do not enter a Form 1099-R for your spouse on your 2021 tax return.

For your spouse, you will only enter the nondeductible traditional IRA contribution (assuming your spouse's traditional IRA was $0 before the contribution for 2021):

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 “No” since your spouse didn't have a nondeductible contribution before this tax year.
9. 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 screen saying $0 is deductible).

When you look at your spouse's Form 8606 you will have on line 1 the $7,000 contribution for 2021 made in 2022. On line 14 should be $7,000 as the basis. Nothing should be in part II for her since she didn't make the conversion until 2022.

@trbelair

[youngkuurus]

Verify that the IRA/SIMPLE/SEP box is checked on your Form 1099-R entry.

My imported 1099-R didn't have the IRA/SIMPLE/SEP box checked. When I checked the IRA/SIMPLE/SEP box on my 1099-R which included my non-deductible IRA contributions then everything works!

This solved the backdoor Roth IRA conversion issue I was having and now shows the correct taxes for 2021.

Thank you for the solution!

[djgirl18]

Hi, so I tried to follow your steps you outlined, but I did not get #7; instead I got moved to a screen that asks me the question of "Tell us how much you transferred or how much was recharacterized." Also, oddly my 2020 info for this line item does not show under my Turbo tax prep filings. Do I need to restart my entire tax process or something as I am not getting prompted with that question #7 in order to complete my backdoor Roth conversion not getting taxed. Please advise! Thanks

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

[DanaB27]

If you do not get step 7 but get the screen that asks "Tell me how much was transferred or how much was recharacterized" you will leave it blank and continue (this question does not apply to entering a backdoor Roth conversion).

Please be aware, that you will first enter the nondeductible traditional IRA contribution under Deduction & Credit and the conversion is entered in the retirement section when you enter your Form 1099-R.

Please review all the steps below to enter a backdoor Roth correctly into TurboTax. 

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 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 and value

@djgirl18

[backdoorRothIssue]

@youngkuurus 

Just to clarify, after "Verify that IRA/SIMPLE/SEP box is checked on your Form 1099-R entry" did you just ignore that "your income" statement

[youngkuurus]

Yes. Once I checked the IRA box on my 1099-R my taxes immediately calculated lower. The "Your incomed exceeds" statement did not affect anything. 

I imported my 1099-R with my IRA information from Betterment and it didn't check the "IRA" box so TurboTax software thought this was for an 401k roll over instead of a IRA roll over.

[turtle919]

I'm seeing the same issue as several others in this thread in that the steps that continue to get posted for the method to account for a backdoor Roth simply are not working.  I have two to enter (one for myself and my spouse) with somewhat slightly different circumstances for each, and neither works.

Mine is what I would consider the simple one.  1099-R showing the gross distribution, some gain listed in 2a under taxable amount, and no check boxes marked for "taxable amount not determined", " total distribution", or "IRA/SEP/simple".  If I follow the steps for entering in the IRA info in the deductions section first, I see some screens not documented in the supplied steps, but get to the screen saying $0 is deductible.  I then move on to entering my 1099-R info.  What I found is that as soon as I check the distribution code for box 7 (mine is showing G), the form incorrectly puts 0 as the total taxable amount on 1040 line 5b when it should be showing a small value there (box 2a on my 1099-R).  If I change the code for box 7 to "no entry", the 1040 form then looks correct and lists the tax I owe on this backdoor Roth conversion since it made some small gains during the year.

Keep in mind, I had this same process last year, with what is basically an identical 1099-R (different $ values), and the posted steps worked perfectly last year.  Not sure what changed, but it sure seems like it could be a bug in the software.

My wife's backdoor Roth is a little more complicated, but I found that I needed to manipulate the data for hers to in order to get it to work.  At this point, I have the 1040 form showing the correct distribution and taxable values for both backdoor Roth conversions, but I'm a little nervous that I'm modifying a 1099-R setting to do it.

[youngkuurus]

Your1099-R that shows your IRA conversions must have the IRA box checked or it assumes it is for a 401k and it won't reduce your taxable amount as backdoor Roth IRA conversions requires the money comes from a non-deductible IRA. This is why I couldn't get it to work. I also had 1099-R forms from my 401k as I was rolling some of it to my IRA to convert it also.

[turtle919]

I tried with the IRA/simple/SEP option checked and unchecked, and it made no difference on my side.  Only tweaking the distribution code got it to work correctly.  Keep in mind...my issue was that it was trying to claim the entire distribution as tax free, which is inaccurate as I have taxable gains in box 2a (made prior to conversion) that are taxable.

My 1099-R from last year was nearly identical (again IRA/simple/SEP not checked, and different monetary values for distribution, taxable amount, and employee contribution) and I had no issues getting it to input correctly on last year's return.  Something seems different this year.

[omkarprabhu]

Hi 

I am having issues was days for Back Door IRA is not working. It was working in 2016-2021. This is the fist year that I have been having issues. Can you please confirm if a solution is in place. I was wrongly told my Tax Expert that it was income limits but the whole purpose of back door IRA was to get around the income limit. Please help !!

Regards

Omkar