Confused about properly reporting Backdoor Roth IRA on tax forms - need help understanding
Title: Confused about properly reporting Backdoor Roth IRA on tax forms - need help understanding 1 I'm planning to talk to an accountant next week, but wanted to get some feedback here first to wrap my head around this situation. My income exceeded the threshold for direct Roth IRA contributions in 2023, so I went the Backdoor Roth route. Here's what I did: 1. Set up a Traditional IRA with Fidelity 2. Made the full $6,500 contribution to the Traditional IRA 3. Converted everything to my Roth IRA (also at Fidelity) Now my Traditional IRA sits at $0, which is good. But when my tax documents arrived from Fidelity, I only received one form titled "1099-R" showing the conversion. I'm confused about how I'm supposed to report the initial non-deductible Traditional IRA contribution on my taxes. Shouldn't there be another form or something? I've heard people mention Form 8606 for non-deductible contributions, but I'm not seeing clear instructions anywhere. Am I missing something? Does anyone have experience with this situation who can explain what I need to do?
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Giovanni Rossi
7 You're on the right track! For a Backdoor Roth IRA, you need Form 8606 to report the non-deductible traditional IRA contribution, plus you'll use the 1099-R to report the conversion to the Roth. The 1099-R from Fidelity is correct - that shows the conversion from Traditional to Roth. But you won't receive a specific form for making the non-deductible contribution - that's what Form 8606 is for, and you'll need to fill this out yourself when filing. On Form 8606, you'll report the non-deductible contribution (likely $6,500 for 2023), and since you converted it immediately with no earnings, the taxable amount of the conversion should be zero (assuming you don't have other pre-tax IRA funds elsewhere).
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Giovanni Rossi
•12 Thanks for the info! Quick question - do I need to fill out Form 8606 every year, or just the year I do the backdoor Roth conversion? Also, what if I had a small amount of interest (like $12) in the Traditional IRA before converting it? Would that change anything?
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Giovanni Rossi
•7 You need to file Form 8606 for any year you make non-deductible contributions to a Traditional IRA, and also for any year you do a conversion. So yes, you'll need it this year. If you had earned $12 in interest before converting, that small amount would be taxable. On Form 8606, you'd show your $6,500 contribution as non-deductible, but the $12 of earnings would be taxable when converted to the Roth. It's a small amount but still needs to be reported correctly.
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Giovanni Rossi
15 After doing a backdoor Roth for several years, I discovered taxr.ai and it's been a game-changer for handling these exact situations. Last year I was confused about how to report my backdoor Roth conversion and the site walked me through all the Form 8606 calculations step by step. https://taxr.ai actually has specific guidance for backdoor Roth conversions that made it super clear - way better than the generic instructions from the IRS.
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Giovanni Rossi
•9 Does it handle the pro-rata rule too? I have some money in a SEP IRA that I can't roll over, and I'm worried about doing a backdoor Roth because of that.
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Giovanni Rossi
•19 Does the service connect directly to Fidelity or other brokerages to pull the necessary information, or do I still need to manually enter everything?
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Giovanni Rossi
•15 Yes, it actually does handle the pro-rata rule calculations! That's one of the more confusing aspects of backdoor Roth conversions when you have existing pre-tax IRA money. It asks about all your IRA accounts and calculates the taxable portion based on the pro-rata rule. The service doesn't connect directly to brokerages, but it makes manually entering the information much easier. You'll just need your 1099-R and account values as of December 31st, and it guides you through exactly what numbers to enter where.
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Giovanni Rossi
19 Just wanted to update everyone - I tried taxr.ai after seeing it mentioned here and it was exactly what I needed! I was completely lost trying to figure out Form 8606 for my backdoor Roth, but the site walked me through it step by step. It even explained the basis tracking across multiple years, which I hadn't understood before. Saved me so much time compared to trying to decipher the IRS instructions or watching random YouTube videos.
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Giovanni Rossi
8 If you're still getting stuck with the Backdoor Roth reporting or have other IRS questions, I've had amazing success using Claimyr to actually reach a human at the IRS. I tried calling the IRS directly about Form 8606 questions last year and was on hold for hours before giving up. With https://claimyr.com, I got through to a real person in about 15 minutes who walked me through the whole process. They even have a demo video showing how it works: https://youtu.be/_kiP6q8DX5c
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Giovanni Rossi
•11 Wait, how does this actually work? I thought it was impossible to get through to the IRS these days. Are they just auto-dialing for you or something?
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Giovanni Rossi
•22 Sounds too good to be true. The IRS phone lines are notoriously impossible to get through. I've tried calling multiple times this season already with no luck.
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Giovanni Rossi
•8 It basically holds your place in line and calls you when it's about to connect with an IRS agent. So instead of you sitting on hold for hours, their system does it for you. When an agent is about to pick up, you get a call back so you can talk to them directly. Yes, the IRS phone lines are definitely a nightmare - that's why I was skeptical too. But it actually worked! I got connected with someone who specifically handled Form 8606 questions and cleared up my confusion about the backdoor Roth reporting in about 10 minutes of actual conversation.
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Giovanni Rossi
22 I need to eat some crow here. After expressing skepticism about Claimyr, I decided to try it anyway because I was desperate for help with my backdoor Roth question. I was going around in circles with Form 8606 and the pro-rata rule. Used the service this morning and got connected to an IRS tax specialist within 20 minutes. The agent walked me through exactly how to fill out the form with my specific numbers and explained how the basis tracking works for future years. Never would have figured this out on my own, and definitely wouldn't have gotten through to the IRS without help.
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Giovanni Rossi
3 Don't forget that if you do the Backdoor Roth, you need to be careful about the "step transaction doctrine" - some tax professionals recommend waiting a period of time between the Traditional IRA contribution and the Roth conversion to avoid potential IRS scrutiny.
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Giovanni Rossi
•17 How long are you supposed to wait? I did mine like 3 days apart. Should I be worried?
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Giovanni Rossi
•3 The waiting period isn't officially defined anywhere, which makes it confusing. Some tax pros suggest waiting 30+ days, others say a week is fine. In practice, the IRS hasn't been challenging backdoor Roth conversions even when done quickly. The most important thing is that you properly document everything on Form 8606. Many people do the conversion within days (like you did) with no issues. The step transaction concern is more theoretical than practical at this point, but it's still something to be aware of.
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Giovanni Rossi
5 I messed up my backdoor Roth reporting last year and had to file an amended return. Make sure you keep track of your "basis" in the Traditional IRA across multiple years if you do this annually. Also, TurboTax really struggled with this - had to manually override some calculations.
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Giovanni Rossi
•10 Which tax software handles backdoor Roth the best? I used H&R Block last year and it was confusing.
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Chloe Robinson
•FreeTaxUSA has been pretty solid for backdoor Roth reporting in my experience. It handles Form 8606 well and asks the right questions to walk you through the process. Much better than some of the bigger names that seem to get confused by the non-deductible contribution part. The interface isn't as fancy but it gets the job done correctly, which is what matters for this type of situation.
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Kayla Morgan
Great question about backdoor Roth reporting! I went through this exact same confusion last year. You're absolutely right that you need Form 8606 - that's the key form you'll fill out yourself to report the non-deductible Traditional IRA contribution. Fidelity won't send you a separate form for that initial contribution, which is why you only got the 1099-R. Here's what I learned: Form 8606 Part I is where you'll report your $6,500 non-deductible contribution, and Part II handles the conversion to Roth. Since you converted right away with no earnings, the taxable portion should be zero. Just make sure to keep good records of your basis for future years if you plan to do this annually. One tip - double-check that you don't have any other Traditional, SEP, or SIMPLE IRA balances anywhere else, as those would affect the pro-rata calculation and make part of your conversion taxable. The IRS looks at all your IRA accounts combined when calculating the taxable portion.
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Oliver Schmidt
•This is really helpful, thank you! I'm new to this whole backdoor Roth process and was getting overwhelmed by all the different forms. Your explanation about Form 8606 Parts I and II makes it much clearer. Quick question - when you mention keeping good records of basis for future years, what exactly should I be documenting? Just the contribution amounts each year, or is there other information I need to track?
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