Reporting Late Backdoor Roth IRA Contributions in TurboTax

[tb001]

I'm in the process of completing a late backdoor Roth IRA contribution, and I'd like guidance on how to report it in TurboTax accurately.

My spouse performed a backdoor Roth IRA contribution for 2023 and 2024 simultaneously in 2024. Specifically, she invested $6500 for the previous year (2023) and $7000 for the current year (2024). Furthermore, she accrued $6.59 in interest in her traditional IRA account before converting all funds (including $6.59 interest) to a Roth IRA account.

Could someone please outline the steps to report these late backdoor Roth IRA contributions in TurboTax properly? I also need assistance on accounting for the interest gained before the late backdoor Roth contributions. 

I'm using TurboTax Deluxe Downloaded Software on Mac to file taxes and need guidance on accurately reporting late backdoor Roth IRA contributions.

Thank you in advance for your help!

[AnnetteB6 · Accepted solution]

For the 2023 tax return, all you need to report is the 2023 non-deductible Traditional IRA contribution of $6500.  Everything else will be reported on the 2024 tax return.

In 2024, you will report the 2024 non-deductible Traditional IRA contribution of $7000 and enter the information from Form 1099-R that will be issued to you in January 2025.  The Form 1099-R will show the total distribution amount including the income that was earned.  After you enter the Form 1099-R and indicate that the distribution was converted to a Roth IRA, only the income amount will be taxable.

Here are the step by step instructions for reporting a back door Roth IRA conversion in TurboTax.  Only complete step 1 for your 2023 tax return.

How do I enter a backdoor Roth IRA conversion?
 

[tb001]

Thanks for quick reply.

[nmanchin]

I am in this exact same situation @AnnetteB6 , except my 2023 taxes have long been filed since we are now in 2025. I did a late $6500 backdoor for 2023 in Jan. of 2024 while at the same time doing a $7000 backdoor for 2024. So, I don't know what to do with 2023 since it looks like I've over funded from the 1099 R. $13500 is reported on the 1099 R for 2024. I did not do step one at the link in 2023. Do I need to amend my 2023 tax filing? 

My wife also did the same.

Thanks!

[ValFL25]

I am in the same exact position of having a 1099-R for 2024 showing a $13,500 contribution ($6500 for 2023 done in April 2024 after submitting ‘23 tax return and $7000 for 2024 done in May ‘24).

Can someone please advise us step by step how to report this backdoor Roth contribution for 2 years contributed in 1 calendar year? 

thanks

[DanaB27]

You should have reported the nondeductible traditional IRA contribution on your 2023 tax return and have a 2023 Form 8606 with a basis on line 14. This basis will have to be entered on your 2024 tax return either in the IRA contribution interview or after you enter Form 1099-R. 

If you didn't report it on your 2023 tax return then you can amend your 2023 return to create the 2023 Form 8606.

To enter the nondeductible contribution to the traditional IRA for 2024 (you should have done the same steps on your 2023 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 “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. Enter your basis in the Traditional IRA from your 2023 Form 8606 line 14 (if you had a basis in the prior year)
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).

To enter the Form 1099-R 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 "Review your 1099-R info" 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 from line 14 of your 2023 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

Please be aware some customers experience the issue that they are missing the screen to enter the prior year basis. Please see Why is my backdoor Roth IRA conversion being taxed? to sign up for updates.

@nmanchin 

@ValFL25 

[ValFL25]

Thank you. I will try this now.

[amenocal]

[SOLVED]: It seems I just needed to enter in my 2024 taxes the amount from the 8606 which totals the amount I contributed for 2023. phew. Thanks!

Original post:
Question about this as I'm in this situation.

I contributed to a backdoor roth in 2024 for both years 2023 and 2024.

It seems that I did report the traditional IRA in my 2023 taxes, but didn't submit the roll over because I didn't have 1099-R (as the rollovers documentations are on a per year basis)

Now the 1099-R for 2024, includes the combined amounts of 2023 + 2024.

So when I'm trying to amend my 2023 taxes it says if I received a 1099-R in 2023 (which technically I didn't). Am I still supposed to submit this and amend my 2023 taxes?

Or does this should be taken care of in my 2024 taxes ? since this is the year where I technically did the rollover even if it was for a previous year?

[MarilynG1]

What codes are in Box 7 of your 1099-R? 

If you reported non-deductible contributions in 2023, on Form 8606, when you enter your 2024 1099-R, you'll be able to indicate that the entire amount was converted to a Roth IRA in the follow-up questions.

Enter your 2024 non-deductible contributions so they get added to your Form 8606 basis from 2023. 

You won't need to amend your 2023 return if this applies. 

@amenocal 

[ambatput]

Hello DanaB27,

I am in a similar situation, and understand the step by step process for the nondeductible contribution to traditional IRA for 2024 return. I also need to amend the 2023 return, however, see another post in this community that says not to amend and just send the 8606 form to IRS. 

How do I enter a backdoor Roth IRA conversion?  "If your conversion includes contributions made in 2024 for 2023, you'll need to check your 2023 return to make sure it includes Form 8606, Nondeductible IRAs. If this form isn't included in your 2023 return, you'll need to fill out a 2023 Form 8606 to record your nondeductible basis for conversion, and mail this form to your designated IRS office. Don’t amend your 2023 return to record your basis."

Irrespective of amend or alternative approach of filling out the 8606 and mailing the form to designated IRS office, I am confused on what lines to complete on 8606. Can you please provide a step by step on how to fill out 8606 for the scenario where I simply need to record the $6500 I contributed in 2024 for the year 2023? Is it just line 14 or more lines need to be completed, because line 14 is a calculation from lines prior lines above in the form and I really am lost on what lines I need to populate with what in the lines above line 14.

Thank You for your help and hope to hear back soon from you.

[DanaB27]

Lines 1, 3, and 14 will be your nondeductible contribution for 2023: $6,500 assuming you didn't have a basis from prior years. Lines 4 to 13 will be blank if you didn't take a distribution or made a conversion.

Note, you can amend your return to create Form 8606 for you. Please see How do I amend my federal tax return for a prior year?

@ambatput 

[ambatput]

Hi DanaB27,

Thank You so much for your response and clearing up my confusion as the other lines on 8606 did not seem relevant. Yes, I do not have a basis from prior years and no conversion or distribution either. I have completed lines 1,3,14 accordingly.

For reference my Vanguard 1099-R shows the following lines that have any values in them:

1 Gross distribution $13,500.00
2a Taxable amount $13,500.00
2b Taxable amount not determined (X)
Total distribution ( )
7 Distribution code(s) 2
IRA/SEP/SIMPLE (X)

16 State distribution $13,500.00

And so then I also tried to enter my 2024 nondeductible contribution to the traditional IRA for 2024 per your detailed and helpful instructions below, however once I reach the 1099-R conversion stage, and follow those instructions, my federal and state taxes increase (I should not see any increase), so I am lost as to why this is happening.  (Note: In step 7 of 1099-R conversion instructions, I entered $6500 for the prior year basis)

I would greatly appreciate it if you could advise, what I am doing wrong at this stage.

Thanks so much for your help.

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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. Enter your basis in the Traditional IRA from your 2023 Form 8606 line 14 (if you had a basis in the prior year)
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).

To enter the Form 1099-R 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 "Review your 1099-R info" 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 from line 14 of your 2023 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

[DanaB27]

To clarify, was your value of all your Traditional/SEP/SIMPLE IRAS on December 31, 2024 $0 (step 7)? If not and you had pre-tax fund in your Traditional/SEP/SIMPLE IRAs then the pro-rata rule applies. This means that with each distribution/ conversion you will have a taxable and nontaxable part. You can see the remaining basis on line 14 of Form 8606, this basis can be carried forward. Therefore, each distribution/conversion in the future will have a taxable and nontaxable part until the basis is all used.

The Backdoor Roth only works if your traditional/SEP/SIMPLE IRAs are empty.  If you plan to use this strategy in the future you might want to think about a reverse rollover where you rollover IRA money to a company plan, like a 401(k). Only pre-tax funds can be rolled from an IRA to a company plan. Therefore, you would isolate the basis and could start the Backdoor Roth procedure fresh. But it only works if your employer allows it, not all plans do.

@ambatput 
 

[ambatput]

Hi DanaB27,

Yes, the value of my traditional/SEP/SIMPLE IRAS on December 31, 2024 $0 (step 7) is 0. 

Here are all the prompts I get when I upload the Vanguard 1099-R form (and my federal and state taxes both jump up by $2744):

* Good news!

There's no tax penalty for your early retirement distribution.

There's usually a penalty of 10-25% for taking money out of your retirement account early.

But, based on your 1099-R, you don't have to.

You still might have to pay taxes on the money you took out, but at the normal tax rate. 

CONTINUE

*Did any of these situations apply to you?

Do any of these situations apply to you?

I took out this money due to a qualified disaster

I inherited this IRA

This is for a SIMPLE IRA within the first two years of participation only

This is for a SIMPLE IRA with more than two years of participation

This is for a SEP IRA

I moved some or all of this money to my HSA as a one-time contribution

I need to file a substitute 1099-R

The corrected box is checked on this 1099-R

None of these apply (checked)

CONTINUE

*Tell us if you moved the money through a rollover or conversion

I converted some or all of it to a Roth IRA 

*Did you convert all of this $13,500.00 (Box 1) to a Roth IRA?

Yes, all of this money was converted to a Roth IRA

Here's your 1099-R info

Financial institutionBox 1 - Gross distribution  

VANGUARD FIDUCIARY TRUST COMPANY	$13,500.00
Total	$13,500.00

 CONTINUE

*Have you ever taken a disaster distribution before 2024?

No

CONTINUE

*Any Nondeductible Contributions to Your IRA? 

Let us know if you made and kept track of any nondeductible contributions to your traditional IRA from 2023 or prior years . 

Yes, I made and tracked nondeductible contributions to my IRA

(Note: I have completed the 8606 form I need to submit for 2023 tax amendment with lines 1,3, 14 completed, and is the $6500 amount)

CONTINUE

* Let's Find Your IRA Basis

If you made any nondeductible contributions in prior years, look at your most recent Form 8606. Find the box called total basis and enter the number from that box below. If you never filed a Form 8606, just enter 0 (zero). 

Total Basis as of December 31, 2023: $6500

 *Tell Us the Value of Your Traditional IRA

Value of your Traditional, SEP, and SIMPLE IRAs, on December 31, 2024  = 0

Outstanding Rollovers = 0

Outstanding Recharacterizations = 0

Not sure where I am screwing up at this point. Appreciate your help.

Thank You

[DanaB27]

It looks like you entered everything correctly. 

To confirm on line 4 b of Form 1040 you show $0? If yes, then you entered everything correctly for the backdoor Roth.  

@ambatput