The back-door Roth IRA process is a two step process. Let us know if you followed the steps below and where you believe the error might have occurred.
Here are the steps to follow to enter your back door Roth IRA conversion. The steps are for TurboTax online. Below will be a link to a TurboTax article that will explain not only how to enter a back door Roth IRA conversion using TurboTax online but also TurboTax desktop.
Step 1: Enter the Non-Deductible Contribution to a Traditional IRA
Open your return if it’s not already open
Inside TurboTax, search for ira contributionsand select the Jump to link in the search results
Select Traditional IRA on the Traditional IRA and Roth IRA screen and Continue
Answer No to Is This a Repayment of a Retirement Distribution?
On the Tell Us How Much You Contributed screen, enter the amount contributed and continue
Answer No on the Did You Change Your Mind? screen
Answer the questions on the following screens, until you reach Choose Not to Deduct IRA Contributions. Select Yes, make part of my IRA contribution nondeductible and Continue
Step 2: Enter the Conversion from a Traditional IRA to a Roth IRA
Inside TurboTax, search for 1099-rand select the Jump to link in the search results
Answer Yes to Did you get a 1099-R in 2021?, then Continue
If you land on the Your 1099-R Entries screen, select Add Another 1099-R
Select how you want to enter your 1099-R (import or type it in yourself) and follow the instructions
Answer None of these apply when you reach the screen Do any of these situations apply to you?
Select I converted some or all of it to a Roth IRA on the Tell us if you moved the money through a rollover or conversion screen
Next, choose Yes, all of this money was converted to a Roth IRA
Continue answering questions until you come to the Your 1099-R Entries screen
To check the results of your backdoor Roth IRA conversion, see your Form 1040:
On the left side of your screen, select Tax Tools, then Tools
Under Tool Center, select View Tax Summary
On the left side of your screen, select Preview my 1040
Your backdoor Roth IRA amount should be listed on Form 1040, Line 4a as IRA distributions
Taxable amount should be zero unless you had earnings between the time you contributed to your Traditional IRA and the time your converted it to Roth IRA, then the earnings would be taxable
Schedule 1, Line 20 IRA deduction, should be blank
Select Back on the left side of your screen to return to where you left off in TurboTax
If your Form 1099-R distribution is being taxed, then your basis in the Traditional IRA is incorrect.
In order for the conversion to the Roth IRA to be tax-free, the basis of the Traditional IRA must be at least as much as the amount converted or more. Go back through the IRA Contribution section of your return and be sure that you did choose to make the Traditional IRA contribution non-deductible. The default is to take the deduction and you must read that question carefully.
If your Form 1099-R reported a distribution for more than one year of Traditional IRA contributions, then you need to double-check the prior year basis that you entered for the Traditional IRA to be sure all prior year non-deductible contributions were taken into account.
I would like to take a deeper look at this. However, I need a diagnostic file which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the directions below:
TurboTax Online:
Sign into your online account.
Locate the Tax Tools on the left-hand side of the screen.
A drop-down will appear. Select Tools
On the pop-up screen, click on “Share my file with agent.”
This will generate a message that a diagnostic file gets sanitized and transmitted to us.
Please provide the Token Number that was generated in the response.
TurboTax Desktop/Download Versions:
Open your return.
Click the Online tab in the black bar across the top of TurboTax and select “Send Tax File to Agent” *
This will generate a message that a diagnostic copy will be created. Click on OK and the tax file will be sanitized and transmitted to us.
Please provide the Token Number (including the dash) that was generated in the response.
*(If using a MAC, go to the menu at the top of the screen, select Help, then, “Send Tax File to Agent”)
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