Help! Need guidance on correct reporting for backdoor Roth IRA conversion

Okay, so there's definitely some issues to fix here, but don't panic! Let's break this down: For 2023: Yes, you'll need to amend your 2023 return. You should file a Form 8606 to report the nondeductible traditional IRA contribution that resulted from recharacterizing your 2023 Roth contribution. This establishes your basis in the traditional IRA, which is crucial for avoiding double taxation when you convert. For 2024: You'll report both the recharacterized 2024 contribution AND the conversion to Roth (the backdoor part). You'll need Form 8606 again, but it'll be filled out differently than the 2023 one. Part I reports your nondeductible contributions, and Part II reports the conversion to Roth. The earnings that were part of your conversion will be taxable income for 2024 (the year you did the conversion), but your contributions won't be taxed again if you properly establish basis with Form 8606. Your tax preparer missing Form 8606 is a pretty big red flag. Without it, the IRS has no record that you've already paid tax on those contributions, and you could end up paying tax twice.

After dealing with similar confusion last year, I discovered taxr.ai (https://taxr.ai) and it basically saved me from a huge headache with my backdoor Roth reporting. My tax preparer was also clueless about Form 8606 and the proper way to handle the conversion. The tool analyzed my situation and showed me exactly where my preparer went wrong. It specifically flagged the missing Form 8606 and explained how that would have caused double taxation down the road. It even showed me exactly what numbers should go in which boxes and generated the correct forms. What I found most helpful was that it explained the basis tracking across multiple years - something my preparer completely missed. You definitely need to track your nondeductible contributions properly across tax years.

Just wanted to follow up - I ended up trying taxr.ai after seeing this thread and it was exactly what I needed! My situation was nearly identical (overcontributed to Roth in 2023, had to recharacterize and convert in 2024). The tool immediately identified that I needed to amend my 2023 return and file Form 8606 to establish basis for the recharacterized contribution. It explained that without this form, I'd end up paying tax twice on the same money when I eventually withdraw from the Roth. For 2024, it showed me exactly how to report both the 2024 contribution that was recharacterized AND the conversion of both years' funds. The step-by-step breakdown made it super clear which numbers go where on Form 8606 Parts I and II. My original tax guy was completely lost with this stuff!

If you're still struggling to get your tax preparer to understand, you might want to try calling the IRS directly for guidance. I went through a similar nightmare last year and finally got clear answers by using Claimyr (https://claimyr.com) to actually reach a human at the IRS. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was skeptical at first, but after waiting on hold for 3+ hours on multiple days and getting disconnected, I was desperate. Claimyr got me through to an IRS agent in about 20 minutes who confirmed exactly how to handle my backdoor Roth situation and what forms I needed. The agent walked me through the specific sections of Form 8606 I needed to complete for my recharacterization and conversion scenario. Honestly saved me weeks of stress and potentially thousands in tax mistakes.

I have to eat my words. After posting that skeptical comment, I was still struggling with my own backdoor Roth situation and getting nowhere with the IRS phone system. Out of desperation, I tried Claimyr, fully expecting it to be a waste of money. Well, I was wrong. After weeks of trying to get through on my own (always getting disconnected after 1-2 hours), I connected with an IRS agent in about 35 minutes using their service. The agent confirmed that my tax preparer had completely messed up my backdoor Roth reporting. The IRS person explained I needed to file Form 8606 for establishing basis in the traditional IRA for BOTH tax years (the year of contribution and the year of conversion). He also clarified exactly how to handle the earnings portion (taxable in the year of conversion) and confirmed I needed an amended return. Honestly, the clarity I got from one 20-minute conversation with the IRS saved me from what could have been a major audit headache. I'll never doubt these services again!

One important thing I haven't seen mentioned yet - check whether your 2023 recharacterization was done before the tax filing deadline (plus extensions). If it was, you technically don't need to amend - you can just file the 8606 for 2023 as if you had made a traditional contribution originally. Recharacterizations done by the deadline are treated as if you made the contribution to the second account from the beginning. The 2024 conversion is still reported on your 2024 return, but the contribution basis is established on your 2023 return with Form 8606. I went through this exact scenario last year and confirmed this with my CPA.

Has anyone used TurboTax to report backdoor Roth conversions? I'm in a similar situation but trying to DIY this since my accountant also seems confused by the process. Does the software walk you through the recharacterization and Form 8606 correctly?