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jls76112
Returning Member

TurboTax Keeps Taxing My Backdoor IRA Conversion - Not my first year to convert

I have been doing a backdoor conversion from a Traditional IRA to Roth for a number of years.  Each year it is not taxed, but this year TurboTax keeps designating it as taxable.  I have delete and reentered, watch videos, read posts, etc.  I'm beyond frustrated.  This is not my first time and I cannot fix it.  I have been working on this for days.

 

Background:

I'm over 59-1/2

I contributed $7000 to my Traditional IRA which has a $0 basis.

I made the 2019 contribution to the Traditional IRA in March 2020 along with a 2020 contribution for $7000 each year.

The conversion for both 2019 and 2020 was done a few days later plus $0.92.

I did not receive a 1099-R.

The non-taxable conversion amounts for prior years show up correctly in TurboTax.

I have gone through all the steps as I previously stated and got the answers as expected, but TurboTax designates it as taxable on the 8606 and therefore increased my tax due.

 

Note:  I do have an inherited Traditional IRA that I have had for several years.  It has never impacted my conversions.  If I remove it, the same taxable situation occurs to the conversion.

 

H E L P !  All help is appreciated and I haven't even gotten to adding my mother-in-law as a dependent along with her care.

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2 Replies

TurboTax Keeps Taxing My Backdoor IRA Conversion - Not my first year to convert

When you convert a traditional IRA to a Roth, you will owe taxes on any money in the traditional IRA that would have been taxed when you withdrew it. That includes the tax-deductible contributions you made to the account as well as the tax-deferred earnings that have built up in the account over the years. That money will be taxed as income for the year you make the conversion.

jls76112
Returning Member

TurboTax Keeps Taxing My Backdoor IRA Conversion - Not my first year to convert

The basis in the Traditional IRA was and has been $0 at the both the beginning and ending of each year.  There are no pre-tax contributions in the Traditional IRA.  All of the contribution into the Traditional IRA that are then converted are post-tax.

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