Help needed: Backdoor Roth conversion in TurboTax showing non-deductible money as income

I'm totally confusing myself with this backdoor Roth situation. In 2023, I made my 2022 traditional IRA contribution (non-deductible money - about $6,500), and immediately converted it to a Roth IRA. Should've been simple, right? But when I'm doing my taxes in TurboTax, it's showing the entire converted amount as taxable income! This can't be right since I already paid taxes on this money. I didn't get a tax deduction when I contributed to the traditional IRA, so why would I pay taxes AGAIN when converting to Roth? I think I must be missing a form or something in TurboTax. Has anyone else dealt with this? I'm worried I'll end up paying double tax if I don't fix this before filing. Any help would be SO appreciated because I'm seriously lost right now.

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18 comments

Emily Parker

•8M

This is a common issue with TurboTax when doing backdoor Roth conversions. The software needs you to enter your Form 8606 information correctly to track your non-deductible contributions. When you convert from traditional to Roth, TurboTax initially assumes the full amount is taxable unless you tell it otherwise. You need to make sure you've entered your non-deductible contribution information first. Look for the section about "IRA Contributions" and specifically indicate these were non-deductible contributions. After you've done that, when you get to the conversion section, TurboTax should recognize your basis and only tax you on any gains (which should be minimal if you converted right away). The key is making sure TurboTax knows about your basis in the traditional IRA, which comes from filling out the Form 8606 information properly.

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Emily Parker

•8M

The non-deductible contribution is reported on Form 8606 for the tax year for which you made the contribution, regardless of when you physically deposited the money. So if it was truly a 2022 contribution made in 2023 (before the tax filing deadline), you should have reported it on your 2022 tax return with Form 8606. If you didn't include Form 8606 with your 2022 return, you should file an amended return for 2022 to include it. This establishes your basis in the traditional IRA. Then on your 2023 return, you'll report the conversion to the Roth IRA, and with the proper basis established, only any gains would be taxable.

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Victoria Scott

•8M

I ran into the exact same nightmare with TurboTax last year! After hours of frustration, I finally discovered taxr.ai (https://taxr.ai) which analyzed my tax documents and immediately identified the issue. It showed me exactly where in TurboTax I needed to enter my non-deductible contribution information BEFORE doing the conversion part. For me, TurboTax was missing the connection between my Form 8606 for the non-deductible contribution and the 1099-R for the conversion. The taxr.ai system pointed out that I needed to explicitly tell TurboTax these were related transactions. Saved me thousands in potential double taxation!

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Victoria Scott

•8M

You don't need to start over at all! It analyzes what you've already entered and identifies specifically what sections need fixing. You just make the targeted corrections in TurboTax based on the guidance. I was also about 80% done with my return when I used it. For backdoor Roth conversions specifically, it's really good because this is one of those commonly mishandled situations in tax software. The system is designed to catch these exact types of disconnects between related tax forms. Unlike general tax tools, it's specifically looking at how forms interconnect, which is where the backdoor Roth often breaks down in TurboTax.

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Benjamin Johnson

•8M

Just wanted to update - I tried taxr.ai after seeing the recommendation here and it immediately found my problem! Turns out I was entering the information correctly but in the wrong sequence. I needed to complete the non-deductible contribution section FULLY before moving to the Roth conversion part. Once I made that change, TurboTax correctly recognized my basis and stopped showing the conversion as taxable income. What a relief! The report I got was super clear and showed screenshots of exactly where to go in TurboTax. Saved me a ton of stress and potentially a big tax bill!

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Daniel Rogers

•8M

If anyone gets stuck dealing with the IRS about backdoor Roth issues (which happened to me last year when my conversion was flagged), I highly recommend Claimyr (https://claimyr.com). I spent WEEKS trying to get through to an IRS agent about my situation. After watching their demo video (https://youtu.be/_kiP6q8DX5c), I gave it a shot. They got me connected to an actual IRS agent in about 20 minutes when I had previously been disconnected multiple times after hours on hold. The agent was able to confirm that my backdoor Roth was processed correctly and remove the flag from my account. Totally worth it for the peace of mind.

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Daniel Rogers

•8M

They don't call the IRS for you - they use technology to navigate the IRS phone system and hold your place in line. When an agent is about to pick up, they call you and connect you directly to that agent. It's basically a sophisticated hold system. The reason it works is that they're constantly monitoring IRS call patterns and optimizing when they place calls. They understand exactly when wait times are shortest and which menu options are most efficient. It's not about "skipping the line" - it's about strategically getting into the shortest lines at the optimal times. I was skeptical too until I tried it.

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Ella Russell

•8M

Update on my skepticism about Claimyr - I'm actually eating my words right now. After struggling with a backdoor Roth issue similar to the OP's for THREE WEEKS and getting nowhere with the IRS, I broke down and tried it yesterday. Got connected to an IRS agent in about 35 minutes (they estimated 45, so even faster). The agent confirmed that my Form 8606 was processed correctly but there was a mismatch with how the 1099-R was coded by my financial institution. She put notes in my account to prevent an erroneous tax notice. Honestly shocked this worked - would have saved me weeks of stress if I'd tried it sooner!

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Mohammed Khan

•8M

For anyone dealing with backdoor Roth issues in TurboTax, here's exactly what you need to do: 1. Enter your non-deductible traditional IRA contribution first 2. Make sure to specify it's NON-DEDUCTIBLE 3. Complete the Form 8606 section entirely 4. Only THEN enter your Roth conversion information 5. Verify the basis amount carries over to the conversion screen I do this every year and it works perfectly. If you do these steps out of order, TurboTax gets confused and can't track your basis correctly.

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Mohammed Khan

•8M

I haven't personally used H&R Block's software recently, but the general principle is the same. You need to make sure you've entered your non-deductible contribution information and completed the equivalent of Form 8606 before you enter the conversion information. The specific navigation and screens will be different, but the sequence is what matters. Most tax software struggles with backdoor Roth conversions if you don't follow the correct order of operations. Try looking specifically for the Form 8606 section in H&R Block's software and complete that first before handling the conversion.

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