How can I know if my family is qualified for the back-door IRA and how to make that happen?

[raclimin]

The banker which is helping to set up the back-door IRA asked us to check with the accountants that to review our Form 1040  to understand if we are qualified to set up the back-door IRA. 

Which number(line) and place where we should look from Form 1040 to know if we are qualified for the setup? What is the threshold for the back-door IRA to allow setting up? 

[marctu]

Let me answer it this way.  

The income limit for a direct Roth IRA depends on your filing status and modified adjusted gross income (MAGI): 

• Single, head of household, or married filing separately and you did not live with your spouse during the year: In 2024, your MAGI must be under $161,000 to contribute to a Roth IRA. 
• Married filing separately and you lived with your spouse at any time during the year: In 2024, your MAGI must be under $10,000 to contribute to a Roth IRA
• Married filing jointly: In 2024, your MAGI must be under $240,000 to contribute to a Roth IRA.

You would do a backdoor Roth of your income is above these limits and you still want to contribute to a Roth.  A backdoor Roth is simply a contribution to a non-deductible traditional IRA and then a conversion to a Roth IRA.  

MAGI is adjusted gross income (AGI) plus these, if any: untaxed foreign income, non-taxable Social Security benefits, and tax-exempt interest. For many people, MAGI is identical or very close to adjusted gross income. MAGI doesn't include Supplemental Security Income (SSI).

So there is no line per se, though you can start with Line 11 of the 1040 and then add the items above if applicable.  You are qualified to do a backdoor Roth if you MAGI is above the levels above.  If it is below, just make a straight Roth IRA contribution and save yourself a step.

Thank you for the question @raclimin 

All the best,

Marc T.

TurboTax Live Tax Expert

27 Years of Experience Helping Clients