Backdoor Roth IRA contribution issues - how to report on taxes correctly?
I just found out about the Backdoor Roth IRA option for high-income earners early last year and realized I could still make contributions for the previous tax year. So I went ahead and made contributions for both years - $6,500 for 2023 and $7,000 for 2024 - all in early 2024. I initially put them in a Traditional IRA and then converted to Roth shortly after. Now I'm trying to file my taxes for 2024 and I'm confused. My 1099-R shows a gross distribution of $13,519.53 (the amount grew a bit in the short time between having the traditional vs. Roth IRA). How do I properly report this when using TurboTax or FreeTaxUSA? I know I need Form 8606, possibly separate ones for each tax year, but I'm clueless about how to trigger this form when using these tax software programs. Anyone gone through this process before?
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Theodore Nelson
You're definitely on the right track! With a Backdoor Roth IRA, you need to report both the nondeductible Traditional IRA contribution and the conversion to Roth. For TurboTax, when you enter your 1099-R information, it should ask about the reason for the distribution. Select that it was a conversion to a Roth IRA. Then it'll ask if you've made nondeductible contributions to your Traditional IRA - say yes. This should trigger Form 8606. For FreeTaxUSA, there should be a section specifically for IRA contributions where you can indicate they were nondeductible. Then when entering the 1099-R, you'll specify it was a Roth conversion. Since you did contributions for two different tax years but converted them in 2024, you'll report both conversions on your 2024 return. The 2023 contribution should have been reported on your 2023 return (just the contribution part, not the conversion).
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AaliyahAli
•Thanks for the info! I have a similar situation but I'm confused about the pro-rata rule. If I already have some money in a Traditional IRA from an old 401k rollover, doesn't that complicate things? How do I handle that in tax software?
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Theodore Nelson
•Yes, the pro-rata rule definitely complicates things if you have existing pre-tax money in any Traditional IRA accounts. The IRS views all your Traditional IRAs as one account for conversion purposes, so you can't just convert the nondeductible portion. For tax software, you'll need to report the total value of all your Traditional IRAs as of December 31st. The software will calculate what portion of your conversion is taxable based on the ratio of nondeductible contributions to your total IRA balance. This gets reported on Form 8606, and both TurboTax and FreeTaxUSA have sections where you can enter this information.
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Ellie Simpson
I went through this EXACT same headache last year and spent hours trying to figure it out. I ended up using https://taxr.ai and it made the whole process SO much easier. Their system analyzed my 1099-R and figured out I needed to file Form 8606 for both years. What was really helpful is that it explained exactly where to enter the nondeductible contribution info in TurboTax (in the IRA contributions section, NOT the 1099-R section). Then it guided me through properly reporting the conversion. Saved me like 3 hours of frustration and Googling.
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Arjun Kurti
•Did it have any trouble with the fact that you did contributions for multiple tax years in the same calendar year? That's what's confusing me most - I'm doing exactly what OP did.
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Raúl Mora
•Is it actually worth paying for that service? Couldn't you just call TurboTax support and get help for free?
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Ellie Simpson
•It handled the multiple tax years perfectly. It actually pointed out that I needed to file an amended return for the previous year to report the nondeductible contribution, even though the conversion happened in the current year. That was something I had totally missed. As for whether it's worth it, I tried TurboTax support first and was on hold forever, then got someone who clearly didn't understand backdoor Roth conversions. The tax documents analysis from taxr.ai was way more specific and walked me through exactly what to do.
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Arjun Kurti
Just wanted to update that I tried taxr.ai after asking about it here. I uploaded my 1099-R and it immediately identified that I had done a backdoor Roth with contributions for two tax years. It gave me step-by-step directions for both TurboTax and FreeTaxUSA. The big revelation was that I needed to amend my 2023 return to report the 2023 contribution (even though I made it in 2024), then report both conversions on my 2024 return. It even showed me screenshots of exactly where to enter everything in the software. Definitely saved me from filing incorrectly!
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Margot Quinn
Since everyone's talking about filing issues, I've been trying to call the IRS for 2 weeks about my backdoor Roth and can't get through. Kept getting disconnected or the "call back later" message. Finally used https://claimyr.com and got connected to an agent in 15 minutes. They have a demo video here if you're curious: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that I needed to file Form 8606 for BOTH tax years - one for 2023 (for the contribution) and one for 2024 (for both the 2024 contribution and both conversions). Which is different than what I thought originally!
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Evelyn Kim
•How does that claimyr thing work? Seems sketchy that they can somehow get you through when no one else can.
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Diego Fisher
•I'm skeptical. The IRS is notoriously unhelpful even when you do get someone on the phone. Did they actually give you useful advice about backdoor Roth reporting?
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Margot Quinn
•It's not sketchy at all - they basically keep dialing for you using their system that detects when lines open up. You only pay if they actually get you connected, and then they call you and connect you directly to the IRS agent. Yes, the agent was incredibly helpful! She walked me through exactly how to report it - that I needed to file Form 8606 with my 2023 return to report the nondeductible contribution (even though I made it in 2024 but designated for 2023). Then on my 2024 return, I need another Form 8606 to report the 2024 contribution AND both conversions. She even explained how to handle the slight earnings before conversion.
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Diego Fisher
Alright, I have to eat my words. After posting my skeptical comment yesterday, I decided to try Claimyr myself since I've been stuck on this same backdoor Roth issue and couldn't get through to the IRS. Got connected to an agent in about 20 minutes, and she was actually super knowledgeable about backdoor Roth IRAs. Confirmed I needed to amend my previous year's return to report the contribution, then report the conversion on this year's return. She even emailed me the specific instructions for Form 8606. I was 100% ready to come back here and say "told you so" if it didn't work, but I'm genuinely impressed. My backdoor Roth confusion is finally cleared up!
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Henrietta Beasley
Has anyone used FreeTaxUSA specifically for this? I find their interface less intuitive than TurboTax and I'm worried about messing up my backdoor Roth reporting.
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Lincoln Ramiro
•I used FreeTaxUSA for my backdoor Roth last year. Go to the Deductions menu, then select "Retirement/IRA" and then "IRA Contributions." That's where you'll report your nondeductible contributions. For the conversion part, enter your 1099-R and make sure to specify it was a Roth conversion. The key is to make sure you check "nondeductible" for the Traditional IRA contribution. FreeTaxUSA will then generate Form 8606 correctly. I actually found it more straightforward than when I used TurboTax the previous year.
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Henrietta Beasley
•Thanks so much! That's super helpful. One more question - did you have to do anything special to indicate that you made contributions for two different tax years in the same calendar year? That's the part I'm most worried about messing up.
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Lincoln Ramiro
•For contributions to different tax years, you report the contribution for the previous tax year on that year's return (so your 2023 contribution would be on your 2023 return), but all conversions go on the return for the year when they actually happened. If you already filed your 2023 return without reporting the contribution, you'll need to amend it. In FreeTaxUSA, go to the "Amend 2023 Return" option from your account page. Then both conversions will be reported on your 2024 return since they both happened in 2024.
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Faith Kingston
Don't mean to hijack the thread but quick question - if I did a backdoor Roth for the first time this year and have never had a trad IRA before, is it as simple as just reporting the contribution and conversion? I keep hearing about pro-rata rules and I'm freaking out.
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Theodore Nelson
•You're in the ideal situation for a backdoor Roth! With no existing Traditional IRA balances, you don't have to worry about the pro-rata rule. It is indeed as simple as: 1. Report the nondeductible Traditional IRA contribution 2. Report the conversion to Roth Since you have no pre-tax money in any Traditional IRAs, your conversion will be tax-free (except for any earnings between the contribution and conversion). The pro-rata headaches only come into play when you have existing pre-tax money in Traditional IRAs. Consider yourself lucky!
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