Help! How do I correctly report a backdoor Roth conversion?
I'm freaking out because I don't think my tax preparer knows what they're doing with my backdoor Roth situation. I need some advice from anyone who's done this before. Here's what happened: I contributed directly to my Roth IRA in 2023 and continued making contributions in early 2024. Then in April 2024 (after I'd already filed my 2023 taxes), I realized my MAGI was too high for both years to qualify for direct Roth contributions. So I scrambled and opened a traditional IRA, recharacterized both my 2023 and 2024 contributions plus all the earnings, then converted everything to a backdoor Roth in May 2024. I just finished submitting my 2024 taxes today and I'm really worried I messed something up. The forms seem super complicated with all these recharacterizations and conversions happening in the same tax year. Did I need to amend my 2023 return? What forms should I have used for the 2024 reporting? My tax guy seemed confused about the whole process which doesn't give me much confidence.
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Omar Hassan
You've got a complex but manageable situation here. Let me break this down: For your 2023 taxes: Yes, you should file an amended return (Form 1040-X) since your direct Roth contributions weren't eligible. You'll need to include Form 8606 to report the nondeductible traditional IRA contributions that resulted from your recharacterization. For 2024: You'll need to report the backdoor Roth conversion on your 2024 return. This requires Form 8606 again, where you'll show the nondeductible contributions and then the conversion to Roth. You'll likely have some taxable income from any earnings that accumulated before the conversion. The form sequence is critical - you must establish the non-deductible basis on Form 8606 before showing the conversion. Many tax preparers miss this step, which can lead to double taxation down the road.
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Freya Christensen
•Thank you so much for the detailed response. I'm confused about one thing - do I need to file Form 5498 as well? My tax preparer didn't mention it but I saw something about it online. Also, for the earnings portion that gets taxed during conversion, does that show up on some specific line of the 8606 or somewhere else entirely?
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Omar Hassan
•You don't need to worry about Form 5498 - that's actually filed by your IRA custodian, not by you. They'll send copies to both you and the IRS, so that part is handled for you. The taxable earnings portion of your conversion will appear on Form 8606 Part II. You'll calculate your nondeductible basis first, and then the difference between your conversion amount and your basis becomes taxable income that will flow to your 1040. This taxable portion represents the earnings that grew while the money was in the accounts.
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Chloe Robinson
After reading about your backdoor Roth situation, I wanted to share something that helped me immensely. I was in a similar situation last year with recharacterizations and conversions, and my tax software kept calculating things incorrectly. I tried https://taxr.ai after seeing it mentioned here, and it was a huge help. Their AI actually analyzed all my IRA transactions and explained exactly how to report them - showing me where my 8606 was wrong and walking me through the correct way to establish my non-deductible basis. What was really helpful was that it translated the tax jargon into plain English explanations for each step of the backdoor Roth process.
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Diego Chavez
•That sounds useful but I'm curious - does it handle the specific situation where contributions were made in one year but recharacterization and conversion happened in another year? That's always been the trickiest part for me.
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NeonNebula
•I'm a bit skeptical about AI tax tools. How accurate is it compared to having a CPA review everything? My backdoor Roth situation isn't identical to OP's but I did contribute to a Roth when I shouldn't have and now need to fix it.
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Chloe Robinson
•It absolutely handles cross-year transactions. The tool specifically asked me about the timing of my contributions versus when I did the recharacterization and conversion. It then showed me how to split the reporting between tax years correctly - which was exactly what my CPA had gotten wrong. For accuracy, I was initially skeptical too, but it actually caught mistakes my accountant made. It showed me the exact IRS regulations and publications that applied to my situation. What I liked is that you can use it to verify what your CPA has done, rather than replacing them entirely. It's like having a second opinion that's backed by the actual tax code.
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NeonNebula
I have to update my skeptical comment from earlier. I tried taxr.ai for my backdoor Roth situation and I'm genuinely impressed. It caught that my tax preparer had completely missed reporting my nondeductible basis on Form 8606, which would've caused me to pay taxes twice on the same money when I eventually withdraw in retirement. The tool walked me through exactly how to fix my forms and even explained which previous year returns I needed to amend. Saved me thousands in potential future taxes for the cost of amending now. Definitely recommend for anyone dealing with these complicated IRA transactions that most tax preparers seem to struggle with.
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Anastasia Kozlov
Dealing with backdoor Roth issues myself and needed to ask the IRS some specific questions about my situation. After waiting on hold for 3+ hours multiple days in a row and never reaching anyone, I tried https://claimyr.com and it was a game changer. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c They got me connected to an actual IRS agent in about 15 minutes who answered all my questions about how to properly document my recharacterization and conversion across tax years. The agent even gave me specific line references for Form 8606 that my tax software was getting wrong.
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Sean Kelly
•Wait, how does this actually work? Does Claimyr just wait on hold for you or something? I've been trying to reach the IRS about my own backdoor Roth mess for weeks.
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Zara Mirza
•I'm really doubtful this works as advertised. The IRS wait times are insane by design. How could some third-party service possibly get you through faster than calling yourself? Sounds like a scam to get desperate people's money.
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Anastasia Kozlov
•It basically waits on hold for you and then calls you when an IRS agent picks up. So instead of being stuck on hold for hours, you just get a call when someone's actually there to talk to you. You don't lose your place in line - they're just handling the hold time for you. They have some kind of system that keeps the connection alive and monitors for when a human answers. I was skeptical too, but after wasting entire afternoons on hold and getting disconnected twice, it was worth trying. The IRS agent I spoke with gave me specific guidance on how to report my backdoor Roth correctly across multiple tax years.
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Zara Mirza
I have to eat my words about Claimyr. After another frustrating morning of getting disconnected after 2 hours on hold with the IRS, I gave it a shot. Got a call back in about 20 minutes with an actual IRS tax specialist on the line. The agent walked me through the proper way to report my backdoor Roth on Form 8606 and confirmed I needed to amend my previous year's return with a 1040-X. They even emailed me the specific IRS publication sections that applied to my situation. Saved me an entire day of waiting on hold and potentially filing incorrectly. Consider me converted from skeptic to believer.
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Luca Russo
One thing nobody has mentioned yet - make sure you keep meticulous records of all these transactions! I did a backdoor Roth 3 years ago and got audited last year. The IRS was confused about the timing between my recharacterization and conversion. I had to provide statements showing the original contribution dates, the recharacterization date, and the conversion date. Also keep any Form 5498s and 1099-Rs your custodian sends you. My audit was resolved in my favor but only because I had everything documented clearly.
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Nia Harris
•What kind of documentation specifically should we keep? Just the confirmation emails from the brokerage or are there specific forms? I've done backdoor Roths for 3 years and I'm worried I don't have enough records.
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Luca Russo
•Keep all transaction confirmations from your brokerage showing the exact dates and amounts for each step. Save the year-end statements that show the contributions. Definitely keep all Form 5498s (which show IRA contributions) and Form 1099-Rs (which show distributions and conversions) forever. I also created a simple spreadsheet tracking each year's contribution, any growth before conversion, and the conversion amount. The IRS agent actually complimented me on having this organized timeline during my audit. Also save copies of your Form 8606 from each year - they build on each other for tracking your non-deductible basis.
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GalaxyGazer
Has anyone used TurboTax for backdoor Roth reporting? I'm trying to DIY this and it keeps giving me errors when I enter my recharacterization.
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Mateo Sanchez
•TurboTax is terrible for backdoor Roths! I had to manually override it last year. The key is entering your nondeductible traditional IRA contribution first WITHOUT checking any boxes about converting to Roth. Complete that section fully, then separately enter the conversion in the Roth IRA section. If you try to do it all at once, TurboTax gets confused.
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Aisha Hussain
I went through almost the exact same situation last year! The key thing that saved me was getting everything properly documented on Form 8606. Since you did both the 2023 recharacterization AND the 2024 conversion in the same tax year, you'll need to be extra careful about the sequencing. For your 2023 amended return: You'll report the recharacterized contribution as a nondeductible traditional IRA contribution on Form 8606. This establishes your basis. For your 2024 return: You'll show the conversion on Form 8606 Part II, using the basis you established from 2023. Any earnings that accumulated between your original contributions and the conversion date will be taxable. The tricky part is that some tax software doesn't handle this cross-year complexity well. Make sure your preparer understands that the 2023 recharacterization creates nondeductible basis that carries forward to reduce the taxable portion of your 2024 conversion. If they miss this connection, you could end up paying tax on money that should be tax-free. I'd strongly recommend double-checking their work on Form 8606 - specifically that they're correctly calculating your nondeductible basis from the recharacterized 2023 contributions.
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Molly Hansen
•This is incredibly helpful! I'm dealing with a similar cross-year situation and I'm worried my tax preparer might miss that connection between the 2023 recharacterization basis and the 2024 conversion. Quick question - when you say "any earnings that accumulated between your original contributions and the conversion date will be taxable" - does that include earnings that happened while the money was still in the Roth IRA before recharacterization? Or just the earnings after it moved to the traditional IRA? I'm trying to figure out exactly what portion of my conversion will be taxable. Also, did you end up needing to provide any additional documentation to the IRS beyond the standard forms, or was the Form 8606 sufficient to show the proper sequencing?
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