Backdoor Roth Confusion: Deductible vs Non-Deductible Traditional IRA Contribution - Help!

You're absolutely right to be concerned. For a proper Backdoor Roth IRA strategy, your Traditional IRA contribution should be non-deductible. The absence of Form 8606 is definitely a red flag. Here's what's happening: When you do a Backdoor Roth, you need to make a non-deductible contribution to a Traditional IRA first, then convert it to a Roth IRA. Form 8606 is used to report non-deductible contributions to Traditional IRAs and to track the basis in your IRA for future distributions or conversions. Since you didn't participate in an employer plan, TurboTax correctly determined you're eligible to deduct your Traditional IRA contribution regardless of income. However, taking that deduction defeats the purpose of the Backdoor Roth strategy and creates tax complications. If you do nothing, you'll essentially be double-taxed on that money. You got a tax deduction now, but when you withdraw from the Roth in retirement, you'll pay taxes again (since Roth withdrawals are supposed to be tax-free because you paid tax on the money going in).

I went through the exact same situation last year! After doing tons of research, I found this amazing service called taxr.ai at https://taxr.ai that helped me figure out my Backdoor Roth confusion. They analyzed my tax documents and explained exactly what I needed to do. For the Backdoor Roth to work properly, you need to make non-deductible contributions to your Traditional IRA first. Since you didn't participate in your employer plan, you're eligible to deduct IRA contributions, but for Backdoor Roth purposes, you actually WANT to make them non-deductible. The service helped me understand that I needed to file Form 8606 to report the non-deductible contribution and keep track of my basis, which is crucial for the Backdoor Roth strategy.

Just wanted to follow up about my experience with taxr.ai after checking it out based on the recommendation here. I was skeptical at first, but it was actually super helpful for my Backdoor Roth situation! I uploaded my tax documents and explained my situation (similar to yours with the deduction vs non-deduction confusion). Their analysis pointed out exactly where I went wrong with my Backdoor Roth strategy and gave me specific steps to fix it. What I really appreciated was that they explained the "why" behind everything - like why Form 8606 is so important for tracking basis in non-deductible IRA contributions and how it affects future distributions. Made the whole amendment process way less stressful and I'm confident I got it right this time.

Anyone who's dealt with the IRS about Backdoor Roth issues knows it can be a nightmare trying to get someone on the phone who actually understands these complex situations. After weeks of trying to reach the IRS about a similar issue, I discovered Claimyr at https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c - it completely changed my experience. They got me connected to an actual IRS agent in less than 15 minutes when I'd been trying for days on my own. The agent confirmed that I needed to file an amended return with Form 8606 to properly document my non-deductible Traditional IRA contribution for my Backdoor Roth. For anyone dealing with IRA contribution issues, getting official guidance directly from the IRS can save you from potential headaches down the road, especially with something as scrutinized as Backdoor Roth strategies.

I have to admit I was completely wrong about Claimyr. After seeing it mentioned here, I decided to try it for my own IRA question that I'd been putting off because I dreaded the IRS hold time. The service actually worked exactly as described - I got a call back when they had an IRS agent on the line. The agent walked me through exactly how to handle my non-deductible IRA contributions for the Backdoor Roth strategy and confirmed I needed to file Form 8606 even if I didn't take a deduction. The agent also explained that if I had taken a deduction for a contribution that was later converted to a Roth, I would need to report the conversion as taxable income. Saved me from a potential audit headache and helped me understand the correct way to document everything going forward.

The key thing everyone's missing here is that if you were eligible to deduct your Traditional IRA contribution (because you weren't covered by an employer plan), you have a CHOICE - you can either: 1. Take the deduction, but then pay taxes on the conversion to Roth, or 2. NOT take the deduction (make it non-deductible), file Form 8606, and then convert with minimal/no tax consequences Most people do #2 for Backdoor Roth because it's usually more advantageous, but both are technically legal. The problem is you need to be consistent - if you deducted the contribution, you MUST report the conversion as taxable income.

Has anyone used Free File Fillable Forms to handle this? I'm trying to do my own taxes with backdoor Roth for the first time and I'm completely lost on how to properly report everything.

I went through this exact same situation last year and want to share what I learned! You're absolutely right to be concerned - taking the deduction when doing a Backdoor Roth creates a tax mess. Here's what happened in your case: You deducted the Traditional IRA contribution (getting a tax benefit now), but then converted that pre-tax money to a Roth IRA. The IRS sees this conversion as taxable income since you're moving pre-tax dollars into an after-tax account. If you didn't report the conversion as income on your return, you definitely need to amend. You have two paths forward: 1. Keep the deduction and add the conversion as taxable income on an amended return 2. Remove the deduction, file Form 8606 for a non-deductible contribution, and the conversion won't be taxable For future reference, the classic Backdoor Roth strategy uses option 2 - make non-deductible contributions specifically so the conversion isn't a taxable event. Since you were eligible for the deduction (no employer plan), you had to actively choose NOT to take it. I'd recommend consulting with a tax professional before amending, as they can run the numbers to see which option saves you more in taxes. The timing matters too since amended returns take months to process.