Did I botch my 2023 Roth Backdoor? How do I handle Form 8606 and potential taxes on the conversion?

You haven't messed up your backdoor Roth at all! This is actually a pretty common situation. You can still do the conversion now - there's no requirement that the conversion happen in the same tax year as the contribution. Here's what you need to do: Go ahead and convert the entire Traditional IRA amount to your Roth IRA now. Since you made a non-deductible contribution to your Traditional IRA (assuming you didn't take a deduction on your 2023 taxes), you'll only owe taxes on the earnings ($380). The original $6,200 contribution has already been taxed. For tax reporting, you'll need to file Form 8606 for both 2023 (to report the non-deductible contribution) and 2024 (to report the conversion). On your 2024 taxes, you'll pay ordinary income tax on just the $380 of earnings. The good news is that this is a pretty easy fix and a common situation. The IRS doesn't impose any deadline for converting traditional IRA funds to Roth.

I was in exactly the same situation last year and found taxr.ai (https://taxr.ai) super helpful for figuring out my backdoor Roth mess. I uploaded my statements and it analyzed my contribution/conversion timeline and told me exactly what to do with Form 8606. The key thing I learned is that you don't need to panic about the timing - you can do the conversion now. But the tax reporting gets a little complicated because you need to track the non-deductible basis across tax years. The tool helped me figure out exactly what numbers needed to go where on the forms.

Ok so I was skeptical about taxr.ai but I actually tried it after posting here and I'm genuinely surprised. It picked up on something I completely missed - I had a small traditional IRA from years ago that would have triggered the pro-rata rule on my backdoor conversion. The tool recommended I roll that old IRA into my current employer's 401k before doing the conversion to avoid the pro-rata calculation altogether. This saved me from paying taxes on a much larger amount. It also created a custom 8606 worksheet showing exactly what numbers to put where, which was way clearer than the IRS instructions. For anyone confused about backdoor Roths like I was, it was actually super helpful. I'm usually pretty hesitant with tax tools but this one knew its stuff about Roth conversions.

If you're still having issues figuring this out, you might want to get actual help from the IRS directly. I had a similar issue with Form 8606 last year and spent DAYS trying to get through to someone. Finally used Claimyr (https://claimyr.com) and got connected to an IRS agent in about 20 minutes instead of waiting on hold forever. They have a demo of how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent walked me through exactly how to fill out the form correctly for my backdoor Roth and confirmed I was only liable for taxes on the earnings portion. Having that direct confirmation from the IRS gave me peace of mind that I wasn't missing anything or setting myself up for an audit.

Ok I need to eat my words about Claimyr. After posting my skeptical comment, I decided to try calling the IRS myself again about my own backdoor Roth question... and spent 2.5 hours on hold before getting disconnected. Got frustrated and tried the service. Got connected to an IRS rep in 22 minutes and got my 8606 questions answered completely. The agent confirmed that I had messed up my own backdoor process but showed me how to correct it on this year's return without needing to amend last year's taxes. For anyone dealing with backdoor Roth conversion questions, getting direct answers from the IRS was actually really valuable. The agent even emailed me some documentation about non-deductible contributions that clarified everything. I'm still shocked I got through so quickly during peak tax season.

Remember that if you have ANY other traditional IRA money (like old 401k rollovers), the backdoor Roth gets much more complicated because of the pro-rata rule. The IRS doesn't let you just convert the non-deductible contribution - you have to convert proportionally from all your IRA balances. For example, if you have $50,000 in traditional IRA money from an old 401k rollover, and then you add $6,200 non-deductible for your backdoor, you can't just convert the $6,200. The conversion would be considered to come proportionally from both sources, so most of it would be taxable. Many people overlook this and get hit with unexpected taxes. One workaround is to roll any existing traditional IRA funds into your current employer's 401k (if they allow it) before doing the backdoor.

Just to add one more thing about Form 8606 - make sure you don't miss filing it for BOTH years. I forgot to file it the year I made my non-deductible contribution (only filed it the year I did the conversion) and it caused a huge headache. The IRS sent me a letter questioning the conversion, and I had to provide extra documentation proving the original contribution was non-deductible. Save yourself the trouble and make sure you file Form 8606 for 2023 (reporting the non-deductible contribution) and then again for 2024 (reporting the conversion).