3 Can you explain the pro-rata rule a bit more? I have some old 401k money that I rolled into a Traditional IRA years ago, plus some non-deductible contributions like OP. Will that mess up the backdoor Roth strategy?

22 The pro-rata rule means the IRS looks at all your Traditional IRA accounts combined when you do a conversion. If you have a mix of pre-tax and after-tax money, you can't just convert the after-tax portion. For example, if you have $50,000 in pre-tax Traditional IRA money from an old 401k rollover, and you add $6,000 in non-deductible contributions (after-tax), your IRAs are now about 89% pre-tax and 11% after-tax. If you try to convert $6,000 to Roth, about 89% of that conversion ($5,340) would be taxable. One workaround some people use is to roll pre-tax IRA funds into a current employer's 401k if possible, which removes them from the pro-rata calculation. Then they can do clean backdoor Roth conversions with just the non-deductible contributions.

18 The main downside is that any earnings on that money will be taxed as ordinary income when you withdraw in retirement, rather than being tax-free like they would in a Roth. If you're young and this money will be invested for decades, that's potentially giving up a lot of tax-free growth. Also, tracking basis gets more complex over time if you have a mix of deductible and non-deductible contributions. You'll need to file Form 8606 every year you make non-deductible contributions and keep records potentially for decades.

I did a reverse exchange last year. It's definitely more complex and expensive. You need an Exchange Accommodation Titleholder (EAT) to hold the new property while you sell the old one. My qualified intermediary charged about $7K more for this vs a standard exchange. You still have 180 days total to complete everything, but now you're racing to sell your property. If you can't sell in time, you lose the exchange benefits.

Thanks for sharing your experience. That $7K additional fee is steep but might be worth it for this property. Do the same identification rules apply in reverse? Or since I'm buying first, is that part simpler?

Yes, it includes weekends and holidays! The only exception is if the 45th day falls on a weekend or legal holiday, then you get until the next business day. But otherwise, it's 45 calendar days, no extensions. Mark your calendar carefully!

Do you think the paid versions of these programs are more accurate than the free versions? I've always used the free stuff but wondering if paying for the premium versions would help avoid these issues.

In my experience, it's not really about free vs paid versions making a difference in accuracy. It's more about how each tax program's algorithm works and how they guide you through entering information. The paid versions usually just offer more support features, audit protection, or help with complicated tax situations. The core calculations should be the same in both free and paid versions of the same software. The bigger difference is between different companies' software.

I filed an amended return last year for a similar issue. It didn't trigger an audit. Just make sure you clearly explain the reason for the amendment. Mine took about 16 weeks to process, but I got my refund with interest!

Thanks for the options! Unfortunately, visiting a TAC isn't practical since I'm in Europe. Do you know if all CAAs follow the same protocol about mailing the documents themselves, or do some allow you to handle the mailing? Also, do you happen to know where I can find that directory of authorized CAAs?

Most CAAs follow the standard protocol of submitting the documents themselves because they're responsible for the package as part of their agreement with the IRS. However, some may be more flexible, especially independent practitioners rather than large firms. You can find the official directory of authorized CAAs on the IRS website by searching "Acceptance Agent Program Directory." It's updated quarterly and you can search by location, including international agents. Look for ones that specifically handle individual ITINs (some only do business ITINs). Another alternative that some of my clients have used: if you have a trusted friend or family member in the US, you could have the CAA send the completed package to them, and they could mail it for you. This gives you a bit more control while still following the proper procedures.

I did it myself from Canada last year. You CAN do it on your own, but you'll need to send original documents (like your passport) or get certified copies from your issuing agency. I wasn't comfortable sending my passport, so I got certified copies which was a whole process with my local government. It took about 3 months total to get my ITIN, and there was a lot of anxiety waiting to make sure everything was processed correctly. If I had to do it again, I'd probably just pay an acceptance agent for the convenience and peace of mind.

Wait, I do have a savings account back home with about $12,000 in it. My parents put money in there for emergencies. Do I seriously need to report that? What form would I even use for that?

Yes, if your foreign account(s) exceeded $10,000 at any point during the calendar year, you need to file a Foreign Bank Account Report (FBAR), which is FinCEN Form 114. This is separate from your tax return and filed electronically through the Financial Crimes Enforcement Network's BSA E-Filing System. This doesn't mean you owe taxes on that money - it's just a disclosure requirement. The deadline is typically April 15, but there's an automatic extension to October 15 if you miss the April deadline. The penalties for not filing can be severe, especially if they consider it a willful violation, so definitely take care of this!

This is so important! When I was at UC Berkeley, I filed my federal taxes correctly but completely forgot about California state taxes. Got a nasty letter about six months later with penalties. Don't make my mistake!