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How do I enter a backdoor Roth IRA conversion?

Forum|Forum|4 years ago
February 16, 2022
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I have been using TurboTax for several years and I always have problems entering my backdoor Roth IRA conversion on the TurboTax online. My wife and I both put in $7,000 non-deductible after tax dollars into a IRA in 2021 and then immediately converted it to a Roth IRA. When I follow the two step process I must be missing something this year as it doesn't change my taxes and when I preview my 1040 (using Tax Tools then Tools) my Form 1040, Line 4a is blank instead of showing the correct $14,000.

TurboTax Premier Online

Best answer by DanaB27

RajeevaRaju please be aware, the "Income Too High To Deduct an IRA Contribution" message is not an error message. As mentioned in my instructions step 10: "If you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a screen saying $0 is deductible". This screen will be after the warning that your contribution isn't deductible because of your MAGI.

Please be aware, line 4a is showing your total IRA distributions, not your nondeductible IRA contributions. If you had IRA distributions then please verify that the IRA/ SEP/ SIMPLE box is checked on your Form 1099-R entry.

Click on "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”

@how does married filing sapera

trbelair, did your spouse convert a traditional to Roth IRA in 2021? The $7,000 contributed in 2022 for 2021 will be converted in 2022 and the conversion has to be entered on your 2022 tax return. For your spouse, you will only enter the nondeductible traditional IRA contribution for 2021 on your 2021 tax return, unless you had some other amount converted.

@trbelair

youngkuurus, I reviewed the information, thank you.

It seems as if you only had distributions from pension plans when I looked at your Form 1099-R entries. None of the Forms had the IRA/ SEP/ SIMPLE box checked. If you had distributions/ conversions from a traditional IRA then please make sure the IRA/ SEP/ SIMPLE box is checked. Then these amounts will be listed in line 4 Form 1040.

Click on "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”

Please be aware, the statement "<name> modified adjusted gross income (MAGI) is $xxx,xxx which puts <name> over the limit for IRA deductions. To deduct a contribution, you can't have a MAGI over $125,000 while being covered by a retirement plan at work" is not an error. As mentioned in my instructions step 10: "If you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a screen saying $0 is deductible". This screen will be after the warning that your contribution isn't deductible because of your MAGI.

@youngkuurus

M

mama2dylan22

How do I enter a backdoor Roth IRA conversion?

https://ttlc.intuit.com/community/entering-importing/help/how-do-i-enter-a-backdoor-roth-ira-conversion/00/25567

Y

youngkuurusAuthor

The link that sends to the backdoor Roth IRA conversion is not working for me this year. I don't understand step 2.1 is trying to say as I don't get a "jump to link". I get all of the other prompts except 1.7 I assumed because all of my my IRA contributions are nondeductible.

DawnC

Employee

Here are the Online instructions below. Step 2.1 is just to get you to the 1099-R section of the software. In the search box, type 1099-r and hit enter. You should see a Jump to 1099-r link in the search results. You may want to delete the 1099-r you started and then go through all of the steps again, slowly, carefully reading each step below. You have to have earned income entered in order to get to the screen in 1.7 - Choose not to deduct IRA contributions.

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 contributions and 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-r and 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

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D

DanaB27Answer

RajeevaRaju please be aware, the "Income Too High To Deduct an IRA Contribution" message is not an error message. As mentioned in my instructions step 10: "If you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a screen saying $0 is deductible". This screen will be after the warning that your contribution isn't deductible because of your MAGI.

Please be aware, line 4a is showing your total IRA distributions, not your nondeductible IRA contributions. If you had IRA distributions then please verify that the IRA/ SEP/ SIMPLE box is checked on your Form 1099-R entry.

Click on "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”

@how does married filing sapera

trbelair, did your spouse convert a traditional to Roth IRA in 2021? The $7,000 contributed in 2022 for 2021 will be converted in 2022 and the conversion has to be entered on your 2022 tax return. For your spouse, you will only enter the nondeductible traditional IRA contribution for 2021 on your 2021 tax return, unless you had some other amount converted.

@trbelair

youngkuurus, I reviewed the information, thank you.

It seems as if you only had distributions from pension plans when I looked at your Form 1099-R entries. None of the Forms had the IRA/ SEP/ SIMPLE box checked. If you had distributions/ conversions from a traditional IRA then please make sure the IRA/ SEP/ SIMPLE box is checked. Then these amounts will be listed in line 4 Form 1040.

Click on "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”

Please be aware, the statement "<name> modified adjusted gross income (MAGI) is $xxx,xxx which puts <name> over the limit for IRA deductions. To deduct a contribution, you can't have a MAGI over $125,000 while being covered by a retirement plan at work" is not an error. As mentioned in my instructions step 10: "If you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a screen saying $0 is deductible". This screen will be after the warning that your contribution isn't deductible because of your MAGI.

@youngkuurus

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

W

wangny

You can ignore the warning and continue to choose all non-deductible. After completing the 1099R section, in 1040 preview, you will see 0 in line 4b.

W

wangny

Sorry, it came back in the review step.

J

Jasmine 110

I need something to print out on the above subject because I have trouble reading instructions and entering in the turbotax premier 1099-R which people tell me I should be entering in form 8606 for a backdoor roth

D

DanaB27

Please see the instructions below on how to enter a backdoor Roth correctly into TurboTax Premier Online. You can click on the 3 dots on the top right of an answer and select to print it.

To enter the nondeductible contribution for 2021 to the traditional IRA:

Login to your TurboTax Account
Click on "Search" on the top right and type “IRA contributions”
Click on “Jump to IRA contributions"
Select “traditional IRA”
Answer “No” to “Is This a Repayment of a Retirement Distribution?”
Enter the amount you contributed
Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contributions before this tax year.
If you had a basis in the Traditional IRA before then enter the amount.
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 1099-R distribution/conversion:

Click on "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”
Click "Continue" and enter the information from your 1099-R
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”
On the "Your 1099-R Entries" screen click "continue"
Answer "yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
Answer the questions about the basis from line 14 of your 2020 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

@Jasmine 110

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6

620kansas

@DanaB27 I've been reading your detailed summaries and I am hopeful you can help with my situation:

- my token is 965504

- This is my first time doing a backdoor Roth conversion

- I put $6000 into an empty Traditional IRA on 3/03/2022
- I converted/moved the $6,000 into a Roth IRA on 3/14/2022 (two weeks later)

- I used post-tax dollars

- I do not have a workplace retirement savings plan

- I have never received a 1099-R

- I have not taken any distributions

- I earned above the single filer threshold $$$,$$$

Questions:

- could you please walk me through how to enter this into Turbo Tax Online?

- do I report the *contribution* on the 2021 return? and how?

- do I report the *conversion* on the 2021 return? and how?

- how do I double check I entered everything accurately?

- am I paying taxes on any of this now?

Thank you!!!! With gratitude!

M

MillerManCPA

I'm using TT downloaded software and I'm having issues getting my backdoor Roth IRA to be non-taxable. I followed the steps shown but it's still showing a portion of my wife's backdoor Roth IRA as taxable. She did a $6,000 backdoor Roth IRA but it's showing $5,689 as taxable. And I'm not seeing any Schedule 1 appearing with the IRA Deduction as zero...nothing shows up.

I cannot figure out what I'm doing wrong...and don't understand why the taxable amount is $5,689 when the backdoor Roth IRA amount was $6,000. It should be zero...the amount showing up doesn't make any sense.

Any suggestions? #confused

M

MillerManCPA

I figured out my issue. I had a value in the box for her IRA balance and it should have been zero. I updated that to zero and TT calculated the taxable amount of her backdoor Roth IRA as zero. All good. Thanks.

G

gpolkin1

I was completely confused by the TurboTax software flow. I was ready to switch to another software after entering everything. These instructions seemed to do the trick.

https://thefinancebuff.com/how-to-report-backdoor-roth-in-turbotax.html

B

barathvasu

I have a question regrading my filing for Tax year 2020 for back door Roth conversion. I started back door roth IRA conversion first time for the year 2020, I contributed for backdoor for the year 2020 between Jan 2021 to April 2021. In my 8606 I see the following, is that correct?

8606 Entries
1) Enter your nondedutible contributions to tradition IRAs for 2020 including those made From January 1, 2021, through April 15, 2021. See instructions .. $6000

2) Enter your total basis in traditional IRAs. See instructions . . .. $0

3) Add lines 1 and 2 . . . . . . . . . . . . . . . .. $6000

In 2020, did you take a distribution from traditional, SEP, or SIMPLE IRAs, or make a Roth IRA conversion?

Since I did tradtional to ROTH IRA conversion I believe this should state 'Yes' Is that correct? If yes, then Item #4 in 8606 is blank for this item "Enter those contributions included on line 1 that were made from January 1, 2021, through April 15, 2021"

Question:

1) This line item #4 doesn't have any value in it, is this correct or Do I need to amend my returns?

FYI Line #14 "Subtract line 13 from line 3. This is your total basis in traditional IRAs for 2020 and earlier years ." has the value $6000

2) Lets say for the above scenario, since I did the conversion on 2021 year. Is there any IRS rule that conversion done applies only for the year 2021 not 2020?

D

DanaB27

Yes, it is correct that line 4 is blank because Form 8606 states "In 2020, did you take a distribution from traditional, SEP, or SIMPLE IRAs, or make a Roth IRA conversion?" if no "Enter the amount from line 3 on line 14". Your conversion happened in 2021 and therefore your answer would be no and line 4 stays blank.

No, the rules for conversion are the same for 2020 and 2021.

@barathvasu

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B

BoooTaxes

Ok, kind of the same issue as many people on here. Doing a conversion on a Traditional Non Deductible IRA to a Roth. I did 6K deposit into my Traditional account earlier in 2021, then immediately converted that to the Roth. I still had a remaining balance in the Traditional (all non deductible), I then converted that remaining balance to the Roth. Turbo has my cost basis correct. It is handling the tax portion correctly, but it keeps giving me a warning & telling me my Magi is too high & that it is a excess contribution. I know there are no dollar limits on converting an IRA to a Roth. Why is giving me the warning & telling me there will be a penalty? Thanks