I did backdoor Roth IRA in 2024 for 7000 from Trad IRA. Why is the 1040 showing 500 as taxable ? Is it because 2023 8606 is 6500?

Forum|Forum|1 year ago
February 13, 2025
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MayaD

A Roth conversion is not limited based on the year you contributed to your traditional IRA, but rather on the year you actually perform the conversion. The conversion results in taxation of any untaxed amounts in the traditional IRA.

If you deducted your traditional IRA contributions and then decided to convert your traditional IRA to a Roth IRA, you will need to pay taxes on the pre-tax assets. Additionally, if you convert any investment earnings from your traditional IRA to your Roth IRA, you will have to pay taxes on the earnings.

irs.gov

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hirenkavaAuthor

Let me clarify - those 7000 are already post tax. I am doing backdoor because my income is higher than the cutoff to be eligible for trad ira deduction. I was hoping that turbotax will ask me if this amount is post tax it but it did not. And now its showing 500 as taxable which is wrong imo. Is there something i can do to correct it ?

ThomasM125

You needed to first enter a non-deductible IRA contribution to a traditional IRA in TurboTax, and then enter the Form 1099-R reporting the rollover into TurboTax and indicate that it is a Roth IRA conversion. You will be asked to enter balances in IRA accounts for current and previous years and also the non-deductible contributions you made to your traditional IRA accounts. You have to be careful to answer those questions accurately to get everything to report properly.

For the backdoor IRA, enter a traditional IRA contribution in the Deductions and Credits section of TurboTax, then Retirements and Investments, then Traditional and Roth IRA Contributions. Indicate that your traditional IRA contribution is non-deductible when asked in the program:

When you enter the 1099-R form in TurboTax, you need to first indicate that you moved the money to another retirement account and that you did a combination of rolling over, converting or cashing out the money. Then, enter the amount converted to a ROTH IRA. Later on you need to indicate that you tracked non-deductible contributions to your IRA.