SEP IRA backdoor roth conversion

[tbabeum]

Hello,

how do I enter backdoor sep Roth conversion in TT desktop version home and business? Was on for 2 hours with 3 different TT experts and couldn’t figure it out. My 1040 4b is still showing that as Taxable Income. I entered the 1099R correctly and the conversion interview questions. I do not believe I would indicate that I should enter a traditional IRA contribution because it is a SEP and it would then say my income too high to contribute to traditional and have a penalty. Which is why I’m doing SEP. does TT have a bug or am I doing something wrong? Thanks

[FangxiaL]

If you contributed to your SEP IRA, it is all pre-tax dollars. There is no option for post-tax or Roth contributions. If you moved your money from SEP IRA account to a Roth IRA account, you essentially converted the pre-tax contributions to Roth IRA, making the distribution taxable. SEP IRA is for taxpayers with self-employment earnings. 

[tbabeum]

This is a backdoor conversion so I’m already contributing after tax dollars (not taxing a deduction). Using a Sep because of income limits and yes I’m self employed. Asking for instructions on doing it in TT using a SEP as no one there could help me with that. It shouldn’t be taxable income. 

[FangxiaL]

There is no income limit on Traditional IRA contribution. But there is a limit on the income for the deductible IRA contribution. SEP IRA is for self-employed taxpayers who want to save taxes on their self-employment earnings. If you contributed to a SEP IRA, you should have taken the deduction. There is no Roth SEP IRA, but you definitely can convert your money in your SEP IRA account to Roth IRA, but that distribution is taxable, because there is no after-tax SEP IRA involved. When did you set up you SEP IRA and for which tax year did you make the contribution? 

@tbabeum

[Kimhorn99]

There is a Roth Sep - Ira now , but it’s 2024 . Can’t find a place that offers it though.