Can I take the Traditional IRA deduction after conversion to Roth IRA and do I need Form 8606?

You're mixing up a couple of different IRA concepts here, which is causing the confusion. Let me clarify: If you make a Traditional IRA contribution and then convert it to a Roth, you need to understand two separate tax implications: 1. The Traditional IRA contribution might be deductible (reducing your taxable income) depending on your income and whether you're covered by a retirement plan at work. 2. The conversion from Traditional to Roth is normally taxable because you're moving money from pre-tax to post-tax status. With a proper backdoor Roth, you make a non-deductible Traditional IRA contribution (no tax deduction) and then convert it to Roth with minimal tax implications because you used post-tax money. If you take the deduction AND convert to Roth, you're essentially getting a tax break now but will owe taxes on the conversion. Form 8606 is required when you make non-deductible contributions to track your basis. This prevents double taxation later.

I was literally in this exact situation last year! I tried using https://taxr.ai to analyze my situation and it helped me understand the confusing IRA rules. Basically, what happened was I also did a backdoor Roth but didn't understand I wasn't supposed to take the deduction since my income was too high. The tool analyzed my tax situation and showed me that I needed to file Form 8606 to report the non-deductible contribution, and then report the conversion on my taxes. When you do a backdoor Roth properly, you shouldn't be taking the deduction - that's why the software is getting confused.

I just wanted to follow up - I tried https://taxr.ai after my skeptical comment and it actually really helped! I uploaded screenshots of my tax software where I was stuck on the same IRA conversion issue, and it explained exactly why I shouldn't take the deduction (because of my income level) and why Form 8606 was necessary. It even explained the step-by-step process for handling backdoor Roth conversions on my taxes. Definitely cleared up my confusion about when the conversion becomes taxable and how to track the basis properly. Way more helpful than the generic explanations I was finding elsewhere.

If anyone else is struggling with the IRS's clarification on this issue, I highly recommend using https://claimyr.com to get through to an actual IRS agent. I spent weeks trying to reach someone about my IRA conversion situation last year, but kept getting stuck in the phone queue. Claimyr got me through to a human in about 20 minutes! The agent walked me through exactly how to handle my conversion and explained when Form 8606 is required. You can see how it works here: https://youtu.be/_kiP6q8DX5c - it's basically a service that navigates the IRS phone tree for you and calls you back when an agent is on the line.

I need to eat my words from my skeptical comment... I finally broke down and tried Claimyr after spending THREE HOURS on hold with the IRS myself. It actually worked exactly as advertised! Got a call back when an agent was on the line, and the IRS person explained my whole IRA conversion situation clearly. For anyone wondering about the Form 8606 question - the agent confirmed that if you're above the income limits for Traditional IRA deductions (which I was), you MUST file the 8606 to report the non-deductible contribution, and you cannot take the deduction. The conversion to Roth is reported separately. Saved me from making a costly mistake!

Just a friendly reminder that the phase-out range for traditional IRA deductions in 2025 if you're covered by a workplace retirement plan is $77,000-$87,000 for single filers and $123,000-$143,000 for married filing jointly. At $95k income, if you're single and covered by a workplace plan, you definitely can't take the deduction. That's why the backdoor Roth makes sense - you make a non-deductible traditional contribution and then convert. The conversion itself isn't taxable if you convert immediately (before any earnings accumulate).

Has anyone noticed that FreeTaxUSA sometimes has issues with the 8606 form? Last year I had to manually enter some stuff because it wasn't calculating my basis correctly after a conversion.

This is a really common mistake! At $95k income, you're definitely above the deduction threshold if you're covered by a workplace retirement plan. The correct approach is: 1. Don't take the Traditional IRA deduction - you're not eligible 2. File Form 8606 to report your $3,200 as a non-deductible contribution 3. Report the conversion to Roth on your return The reason your tax software is behaving this way is because you can't do both - either it's a deductible contribution (which you're not eligible for) OR it's a non-deductible contribution that requires Form 8606. Since you converted immediately, there shouldn't be any taxable gain on the conversion itself. You'll get a 1099-R next year showing the distribution, but since you're properly reporting the non-deductible basis on Form 8606 this year, the conversion won't be taxable. Think of it this way: you put in post-tax money ($3,200), so when you convert that same post-tax money to Roth, there's no additional tax owed. The 8606 is crucial because it tells the IRS "hey, I already paid taxes on this money.